Eurozone economic sentiment deteriorated further in August reflecting the sharp weaknesses in confidence among consumers, retailers and construction managers due to concerns over recession and the lingering sovereign debt crisis.
The economic sentiment index dropped to 86.1 from 87.9 in July, European Commission's monthly survey revealed Thursday. The reading was the lowest since late 2009 and below the expected level of 87.5.
Today's figures are a further wake-up call to Eurozone policymakers to speed up their efforts in resolving the crisis, said ING Bank NV's economist Martin van Vliet.
Led by deterioration in managers' production expectations and their assessment of the current level of overall order books, industrial confidence slid to -15.3 from -15.1 a month ago.
In the construction sector, confidence declined to -33.1 from -28.5 in July. The retailers' confidence index fell to -17.3 from -15 a month ago.
Amid higher unemployment fears and worsened consumer expectations about the future general economic situation, consumer confidence weakened to -24.6 from -21.5. Confidence in services fell for a fifth month with the index sliding to -10.8 from -8.5 a month ago.
A separate survey from the European Commission showed that the business confidence rose by 0.06 points to -1.21 in August and better than the forecast of -1.3 points.
The slight increase was largely due to an improvement in managers' assessment of past production, export order books and the adequacy of stocks of finished products. By contrast, managers' production expectations and their assessment of overall order books deteriorated in August.
The 17-nation euro area shrank 0.2 percent in the second quarter. Given the current sluggish economic environment, it is most likely that the region slid into recession in the third quarter.
With countries reluctant to meaningfully slow the pace of fiscal tightening, more unconventional monetary stimulus and a much weaker euro are likely to be needed to put the economy back on a path of sustained growth, said ING Bank economist.
by RTT Staff Writer
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