Euro zone sentiment dips to new two-year low in February

February 27, 2019

By Philip Blenkinsop

BRUSSELS (Reuters) – Euro zone economic sentiment dipped for an eighth consecutive month to a new two-year low in February as managers in industry became more downbeat about inventories, order books and production expectations.

Euro zone economic sentiment slipped to 106.1 points in February from an upwardly revised 106.3 in January, the European Commission said on Wednesday, marking the lowest level since November 2016.

Economists polled by Reuters had expected a slightly sharper decline to 106.0.

The survey adds to evidence that economic prospects of the 19-member euro zone for the start of 2019 are muted after only modest growth of 0.2 percent quarter-on-quarter in the third and fourth quarters of 2018.

Sentiment in industry fell for a third consecutive month to -0.4 points in February from 0.6 points in January, well below market expectations of 0.1.

By contrast, sentiment in services, a sector which produces two thirds of the euro zone GDP, picked up to 12.1 from 11.0 in January, against expectations that it would be unchanged, although the chief cause for the improvement was the past business situation.

The mood of consumers also picked in February up to -7.4 after January’s -7.9, while sentiment in retail trade was less gloomy at -1.6 points in February from -2.1 in January.

Among the major countries, overall economic sentiment improved in the Netherlands, but was lower in France and Italy and very slightly in Germany and unchanged in Spain.

A separate business climate indicator, which helps point to the phase of the business cycle, was unchanged in February at 0.69, above the 0.60 average forecast in the Reuters poll. For January and February, this was the lowest reading since January 2017.

(Brussels newsroom)

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