Eurozone Economic Confidence Weakens More Than Expected

(RTTNews) - Eurozone economic confidence deteriorated in July due to lower sentiment among managers in industry and construction, monthly survey conducted by the European Commission revealed Friday.

The economic sentiment index slid to 94.5 in July from 95.3 in the previous month. The reading was forecast to drop to 95.0. This was the sixth consecutive decline.

The survey showed that deterioration in industrial and construction sentiment were partially offset by higher confidence in retail trade and among consumers.

Industry confidence dropped further in July as managers' production expectations and their view about the current order books weakened. The indicator came in at -9.4 compared to -7.3 in the previous month.

In the service sector, confidence was broadly unchanged as a marked deterioration in managers' assessment of past demand was partially offset by an increase in their assessment of the past business situation. The services confidence index dropped to 5.7 from 5.9 in the previous month.

At -15.1, the consumer sentiment index improved from -16.1. Sentiment among consumers continued to recover from a record low seen in September 2022.

Confidence among retailers also increased in July, reflecting much more optimistic views on the past and expected business situation. The corresponding index rose to -4.5 in July from -5.9 a month ago.

Construction confidence dropped in July as builders' assessments of the level of order books continued deteriorating. The index posted -3.1, down from -2.4 in June. The employment expectations index fell more notably in July, to 103.0 due to less optimistic employment plans among industry and service managers. Further, the survey showed signs of easing price pressures. Selling price expectations continued descending in industry, retail trade and construction, while remaining broadly unchanged in services, survey data showed.

The small fall in the economic confidence leaves it consistent on past form with output stagnating and suggests that, despite the stronger-than-expected GDP data reported today for some economies, the Eurozone started the third quarter on a weak footing, Capital Economics' economist Giulia Bellicoso said.