Economic sentiment down in both EU and eurozone

The European Union’s Economic Sentiment Indicator in August declined by five points to 97.3 in the EU and by 4.7 points to 98.3 in the eurozone.

The European Commission said the decline came about as a result of a broad based deterioration in sentiment across the sectors, with losses in confidence being particularly marked in services, retail trade and among consumers. Only the construction sector in the eurozone recorded an improvement.

“In both regions consumers were pessimistic about the future general economic situation and expressed higher unemployment fears,” the Commission said with reference to its monthly economic survey.

Among the largest member states, Germany (-5.7) and the UK (-5.6) reported the strongest decreases in sentiment, followed by Poland (-3.6), the Netherlands (-3.0) and to a lessor extent, Italy (-0.7), while sentiment remained broadly unchanged in Spain (-0.3). The Economic Sentiment Indicator remains above its long-term average only in Germany.

Sentiment in Malta decreased by -3.7, the largest monthly drop since November.

Although confidence in industry remains above its long term average, it worsened by 2.6 points in the EU and by 3.8 points in the eurozone, on the back of a drop in managers’ appraisal of the level of order books and production expectations.

Sentiment in services decreased strongly in the EU (-7.5) but less so in the eurozone. “The difference between the two regions reflects a marked decrease in sentiment in the UK, in particular concerning the past evolution of demand. However, in both regions, past and expected demand were assessed as significantly worse,” the Commission said.

Sentiment in the retail sector dropped in both the EU (-5.8) and the eurozone (-5.1), owing to managers’ negative assessments of the present business situation and business expectations, and due to an increasing number of firms assessing their volume of stocks as too large.

Confidence among consumers worsened in both the EU (-4.4) and the eurozone (-5.3).