Figures from the European Commission show that eurozone consumer confidence fell unexpectedly in August. The Commission’s initial reading on sentiment fell from -7.9 to -8.5, the lowest since April’s reading of -9.3. Economists were forecasting a reading of -7.7.
This was the third consecutive month of weakening consumer confidence in the group of countries that share the euro.
Dr Howard Archer, chief European and UK economist at IHS Markit, said: “It seems reasonable to suspect that a further appreciable drop in eurozone consumer confidence to a four-month low in August is influenced by concerns over the UK’s vote to leave the EU as well as by recent slower eurozone growth.”
In the meantime, according to official data published by Destatis, Germany’s economy continued to grow in the second quarter but at a slower rate after a strong start to the year. Germany’s GDP increased by 0.4 per cent quarter-on-quarter, or an annualised rate of 1.7 per cent. The outcome was in line with estimates but lower than the 0.7 per cent increase seen in the first quarter.
The balance of exports and imports resulted in the positive contributions to growth in GDP. Exports rose by 1.2 per cent while imports fell by 0.1 per cent, which indicated lack of domestic investment.
Destatis also reported a gain of 0.2 per cent in household spending and a 0.6 per cent growth in government spending. On an annual basis, Germany’s GDP was up by 1.8 per cent, marginally lower than the first quarter’s 1.9 per cent increase.
Finally, in the US, a report published by the Commerce Department showed that new home sales increased at the highest rate since late 2007. Low mortgage rates and a strong employment market are supporting the residential real estate market.
New home sales rose to 12.4 per cent to an annual rate of 654,000, the strongest level since 2007. The sharp increase in new home sales exceeded the expectations of economists, who had forecasted new home sales to fall to a rate of 580,000 from the 592,000.
New home sales rose by 40 per cent in the northeast and shot up by 18.1 per cent in the south. On the other hand, sales increased by 1.2 per cent in the midwest and remained unchanged in the west.
This article was compiled by Bank of Valletta plc for general information purposes only.