Business Climate Indicator (BCI) in Eurozone

The Business Climate Indicator (BCI) is a composite, standardised indicator that summarises the business climate in euro area manufacturing. It is compiled by the European Commission (DG ECFIN) from the harmonised industrial survey (Business and Consumer Surveys). Unlike the sectoral confidence indicators, expressed as net balances from -100 to +100, the BCI is presented on a standardised scale, typically between -4 and +4, with a historical mean of 0.

It is built by combining five survey series from the monthly industrial survey: the recent production trend, total order books, export order books, the level of stocks (entered with an inverted sign) and production expectations. Each component is standardised (mean 0, standard deviation 1) before being averaged, which gives the indicator its characteristic scale, distinct from the usual opinion balances.

It serves as a leading gauge of euro area industrial activity: positive and rising readings anticipate manufacturing expansion, while negative and falling ones point to weakness in the sector. Markets track it alongside the manufacturing PMI as a cyclical signal ahead of the hard data -industrial production, GDP- confirming the trend.

It is a qualitative opinion survey rather than a direct measure of output, so it can reflect respondents' short-term sentiment beyond the fundamentals. It covers only manufacturing, not services or construction, and is revised each month as survey responses are refined.