In December 2018, the Economic Sentiment Indicator (ESI) decreased markedly in both the euro area (by 2.2 points to 107.3) and the EU (by 2.0 points to 107.6). The deterioration of euro-area sentiment resulted from lower confidence in industry, services, construction and among consumers, while confidence improved slightly in retail trade. The ESI weakened in all five of the largest euro-area economies; significantly so in Spain (-3.0), France (-2.0), Germany (-1.9) and Italy (-1.4) and, marginally so, in the Netherlands (-0.3). The marginally smaller decline of the headline indicator for the EU (-2.0) can be attributed to virtually unchanged sentiment in the largest non-euro area EU economy, the UK (+0.1), while the ESI decreased markedly in Poland (-1.2). EU confidence deteriorated markedly in line with the euro area in industry, services, construction and among consumers, and also weakened in retail trade. In December 2018, the Business Climate Indicator (BCI) for the euro area decreased (by 0.22 points to +0.82). Managers' assessment of both past and expected production deteriorated markedly, as did their appraisal of both their overall and export order books. In addition, their views on the stocks of finished products worsened to some extent.