Eurozone investor confidence slips with German production

A MAJOR barometer of the Eurozone’s investor confidence was released yesterday, suggesting an unexpected cooling in sentiment over the last month.

The Sentix investor confidence index’s headline score dropped from 9.3 last month to eight this month, indicating a minor decline in confidence. Analysts had expected a marginal improvement to 10.4.

Despite the drop, investors are still optimistic in general, with any positive number suggesting a more bullish than bearish outlook. A score above zero has now been recorded for four months in a row, following almost two years of negative reports.

German industrial production figures released yesterday morning were also a cause for some concern, with a 1.2 per cent drop posted between September and October, driving the increase over the 12 months to October to only one per cent.

Since the financial crisis, the German economy has proved to be the Eurozone’s most reliable source of strength. The modest figure masks a dramatic difference between the first and second halves of 2013. In the first six months, industrial production expanded by nearly four per cent, but the four months to October actually saw an overall contraction of 1.4 per cent.

“The weak platform provided by the falls in September and October means that, barring some hefty monthly rises in November and December, industrial production is now likely to contract in the fourth quarter. This, in turn, suggests that German GDP growth could slow further from the already meagre 0.3 per cent expansion registered in quarter three,” said Jonathan Loynes of Capital Economics.

“Overall, the numbers put another dent in hopes that Germany will drive a further recovery in the Eurozone as a whole.”