A WAVE of disappointing data released yesterday showed the Eurozone was struggling to stave off another recession, with the European Central Bank’s lacklustre statement on Thursday failing to lift confidence.
Market inflation expectations (based on swaps prices) fell to 1.83 per cent, their lowest since 2010. ECB president Mario Draghi disappointed investors last week when he failed to specify the size of his asset purchases and gave no hints to any future policy measures.
Meanwhile, German factory orders fell 5.7 per cent month-on-month in August, far below expectations of a 2.5 per cent fall, official figures showed yesterday.
The Business Climate Index produced by thinktank IFo dropped to 104.7 for the Eurozone, below analysts’ expectations, and the lowest reading since April last year.
Other surveys provided worrisome results too. Markit’s retail purchasing managers’ index (PMI), which looks to gauge retail sales, shows Germany’s retail sector score a 47.1. Below 50 signifies contraction. This is the PMI’s worst value for Germany for 53 months.
For the Eurozone as a whole, the retail PMI was 44.8, a 17-month low. France posted an 18-month low of 41.8.
Eurozone final composite PMIs were revised slightly downwards from the flash estimate, hitting a 10-month low of 52.0 in September.
Another survey by Sentix, which tracks morale among investors, showed yesterday that sentiment in the Eurozone had fallen to hit its lowest level since May 2013. It was minus 13.7 in October down from minus 9.8 the previous month.
“Consumer spending in the euro area looks to be on the downturn, with the latest retail PMI figures showing sales falling for the third month running. Furthermore, September’s decrease in sales was the sharpest for almost a year-and-half as rates of contraction gathered pace in France and Germany,” said economist Phil Smith at Markit.
“These data corroborate the picture from earlier manufacturing and services releases of renewed weakness in the currency bloc.”