Economic Sentiment Tumbles for Eurozone - ING
Bert Colijn, Research Analyst at ING, notes that the economic sentiment indicator for the Eurozone decreased by 0.9 points to 103 in March.
“This was the third drop in a row and it therefore concludes a dreadful first quarter of the year in terms of sentiment as the quarterly drop was the worst since 2012. The decline was caused mainly by lower confidence in the service sector and among consumers.
Services reported weaker demand in the first quarter. This can be linked to lower consumer confidence, which fell sharply again in March as global political and economic uncertainties remain very much on consumers’ radar screens. Industrial confidence was roughly unchanged in March, after declines in previous months. The assessment of past production improved, which is a positive sign for industrial production in February.
The continued drop in the ESI clouds the view of an improving Eurozone economy in March. The PMI for the Eurozone rebounded, while in Germany the IFO business confidence indicator also improved. This gave the indication that businesses did not assess March as poorly as they did January and February, as risks caused by low oil prices, weak emerging markets growth and US rate hikes subsided somewhat.
The ESI brings some doubt to this view and indicates that the impact of global issues might haunt the Eurozone economy longer than one would hope. This means that even though economic sentiment in the Eurozone is still well above its long-term average, the overall declines in survey indicators hint at somewhat weaker GDP growth this quarter than in Q4.”
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