Eurozone economic confidence slid further for the eighth consecutive month in February, although the latest dip was less than economists forecasted. This was largely thanks to a solid services sector, suggesting that the drop is due to trade disputes and that the slide may be bottoming out.
The European Commission’s index – which gauges the sentiment of households and businesses – weakened to 106.1 in February from a revised 106.3 the prior month. This was the eighth monthly drop.
In the second half of 2018, the currency bloc suffered an onslaught of downbeat data suggesting that the economy is losing steam. European Central Bank (ECB) president Mario Draghi noted last month that risks have moved to the downside due to factors such as rising protectionism, Brexit and a softening Chinese economy.
In the meantime, inflation in Germany held steady in February as the economy and the broader eurozone grapple with an ongoing slowdown.
Consumer prices, harmonised to make them comparable with inflation data from across the whole of the European Union, rose at an annual pace of 1.7 per cent for the third month in a row, and matched forecasts.
The ECB targets inflation of close to but below two per cent for the eurozone as a whole. Compared to the previous month, the harmonised index rose by 0.5 per cent in February, in line with economists’ forecasts.
ECB policymakers gather to assess the economic outlook this week after Germany barely avoided recession in the second half of last year.
Finally, in the US, economic growth slowed in the fourth quarter of 2018, according to a report published last week by the Commerce Department. However, the pace of growth exceeded analysts’ estimates.
GDP expanded at an annualised rate of 2.6 per cent in the fourth quarter of last year in contrast to a jump of 3.4 per cent in the third quarter. Economists expected the economy to grow at a 2.2 per cent pace. The bigger-than-expected increase came as consumer spending growth slowed but continued to make a strong contribution to the economy.
This report was compiled by Bank of Valletta for general information purposes only.