Eurozone economic sentiment deteriorated more-than-expected in July due to lower confidence in all sectors and marked the fourth consecutive month of downturn.
The economic sentiment index fell to 87.9 from 89.9 a month ago, survey data from the European Commission showed Monday. The reading was also below expectations for a score of 88.9.
Confidence in industry continued the downward trend reported since March. Industrial confidence fell to -15 in July from -12.8 in the previous month.
The decline in industrial confidence can be attributed to decreasing production expectations, as well as a more negative assessment of the current level of overall order books and increasing stocks of finished products.
Amid higher unemployment fears, as well as worsened expectations about the future general economic situation and savings, consumer confidence dropped to -21.5 from -19.8 in June.
Due to a fall in order books, confidence in the construction sector slipped to -28.4 from -28.1 last month. Likewise, services confidence fell to -8.5 from -7.4 in June.
Retailers' sentiment weakened to -15 from -14.4. The present business situation and the development of the current volume of stocks were viewed more positively, while the expected business situation deteriorated significantly.
In a separate report, the commission said the business confidence decreased by 0.32 points to -1.27 in July. Also, the reading was weaker than the consensus forecast of -1.09. The decline was driven by declines in all five components.
The steepest decreases occurred in managers' assessment of past production and export order books. Production expectations and the assessment of overall order books and the adequacy of stocks of finished products also deteriorated.
Today's bad news might help to convince the European Central Bank to take further supportive action at or before its meeting this Thursday, said Jennifer McKeown at Capital Economics. The ECB is widely expected to take more measures as President Mario Draghi assured last week.
Standard & Poor's today lowered the currency bloc's growth outlook for next year. The agency now sees 0.4 percent expansion in 2013, much less than the 1 percent growth forecast earlier.
According to the International Monetary Fund, Eurozone will shrink 0.3 percent this year. The 2013 growth forecast for the currency-bloc was cut to 0.7 percent from 0.9 percent.
by RTT Staff Writer
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