Eurozone economic confidence weakens in January

Eurozone economic sentiment weakened in January driven by sliding confidence in retail trade and services as Covid-19 containment measures remain in place, survey results from the European Commission showed Thursday.

The economic sentiment index fell less-than-expected to 91.5 from 92.4 in the previous month. The expected level was 89.5. The industrial confidence index rose unexpectedly to -5.9 from -6.8 a month ago.

The reading was seen falling to -7.2.Managers’ assessments of the current level of overall order books improved for the seventh month in a row and their production expectations and appraisals of the stocks of finished products remained broadly unchanged in January.

Meanwhile, reflecting the decline in assessments of the past business situation and past and expected demand, the services sentiment index fell to -17.8 from -17.1 in December.

However, the score was better than the forecast of -18.8. The consumer confidence index came in at -15.5, in line with flash estimate and weaker than -13.8 in the prior month.

Households’ assessments of their past and future financial conditions, their intentions to make major purchases and especially their expectations about the general economic situation deteriorated in January.

The retail trade sentiment plunged to -18.9 from -12.9 in December. The slide in retail trade confidence was fuelled by managers’ assessments of the past business situation and the adequacy of the volume of stocks.

Construction confidence remained broadly unchanged at -7.7 in January as managers’ improved appraisals of the level of order books were counterbalanced by more muted employment expectations.

The business confidence index rose to -0.27 in January from -0.40 in December, data showed. The economic confidence survey supports the assessment that the euro area economy will contract again in the first quarter, Jack Allen-Reynolds, an economist at Capital Economics, said. With the virus a long way from being under control, the downside risks to forecasts are growing.

Source: GNA