ECB company contacts: AI and defence grow while process industries shrink
Victoria Shinder2 min readThe European Central Bank published the main findings of its latest round of contacts with non-financial companies on 30 October, as a box for its Economic Bulletin. The picture is uneven. Construction and real estate were losing momentum, and a hot, dry summer weighed on agriculture and food production while lifting energy output through air-conditioning demand. Retail and related transport stayed subdued, while most other business and consumer services grew well.
Consumers remained price-sensitive. Retailers described downtrading as a major driver of consumption, especially in Germany and France, where sentiment was particularly low. Demand for furniture and household appliances was weak or falling, partly because of subdued housing investment, but contacts reported rising demand for consumer electronics, bought ahead of expected price increases, and for cars, with battery-electric vehicles surging on high fuel prices and hybrids imported from China growing fast. Tourism held up as travellers diverted to euro area destinations away from areas near the conflict in the Middle East.
Investment was increasingly driven by AI, electrification, defence and aerospace. Software and IT consulting firms reported exceptional growth, with customers keen to keep data within sovereign frameworks; engineering exporters benefited from the global data centre boom, and steel was starting to gain from stricter import quotas and tariffs applied since 1 July 2026. Food, chemicals, textiles and pulp and paper continued to face weak demand amid high energy, labour and regulatory costs and cut investment. On balance, contacts reported declining headcounts in manufacturing and, to a lesser extent, in services.
What it means
The survey describes a two-speed economy inside the same industrial base: sectors tied to AI, defence and the grid are hiring and investing, while energy-intensive process industries are retrenching. For monetary policy that mix matters, because it means stronger investment figures can coexist with weak employment and soft consumer demand. The report is qualitative, a summary of conversations, but it is the ECB's own reading of firms.