The sharp deterioration of Eurozone's consumer confidence, which fell to a forty-month low in September, adds to concerns that the economy is heading for a recession in the third quarter, IHS Global Insight Chief UK and European Economist Howard Archer said Friday.
According to the economist, the euro area economy is set to shrink in the range of 0.3 percent and 0.4 percent in the third quarter, following the 0.2 percent sequential contraction in second quarter. The fall in consumer sentiment heightens concern that spending will remain weak in the near term at least.
Latest statistical data showed that consumer confidence fell to a 40-Month low of -25.9 in September from -24.6 in August, as rising unemployment in many countries, a move back up in inflation and recent largely poor data and surveys likely intensified consumer fears over the economic situation and outlook.
The slump in confidence primarily reflects the substantial increase in pessimism over both the recent economic situation and the economic outlook for the next 12 months. Unemployment concerns that rose appreciably for a third straight month also contributed to the downturn. Adding to the squeeze on their purchasing power, the region's inflation accelerated in August.
Underlining the weakness in the economy, the latest purchasing managers' survey showed that Eurozone's manufacturing and services output contracted at the fastest rate in 39 months in September. Supporting data revealed that unemployment in the single-currency bloc climbed by 88,000 in July, marking the fifteenth successive increase.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.