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Investing.com -- Euro zone businesses are experiencing a slight improvement in conditions, pointing to modest growth, with the artificial intelligence (AI) sector showing particularly strong performance, according to the European Central Bank’s survey of non-financial companies released Friday.
The ECB, which kept its monetary policy unchanged on Thursday, indicated that the economic outlook remains consistent with its earlier projections for slow but steady growth, as tariff challenges are counterbalanced by consumption.
"Many firms were investing strongly in digital infrastructure, giving rise to substantially growing demand for software and databases, particularly cloud solutions, and AI," the ECB stated in its report.
The survey revealed that these investments were especially robust in the financial and public sectors. The increasing use of artificial intelligence is also beginning to disrupt traditional consultancy firms’ business models.
Manufacturing continues to face difficulties, with output "still weighed down by tariffs, uncertainty and challenges to competitiveness as well as relatively muted growth in consumer goods spending," the ECB noted, adding that little improvement is expected in the near term.
The construction sector is showing signs of recovery, with firms reporting good or reasonable growth. This growth is particularly linked to consumer spending on tourism and hospitality, as well as investment in software, data solutions and artificial intelligence.
While overall consumer spending remained weak, appliance and electronics manufacturers reported more positive conditions. Tourism, hospitality, and entertainment sectors experienced strong growth over the summer months.
Machine investment continues to be subdued, but spending on AI technologies is surging.
The ECB survey also indicated that the employment outlook remains relatively subdued, wage growth is moderating, and selling price momentum is showing a further slight slowdown.
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