Eurozone confidence continues to dive as retail slump deepens
EUROPEAN business and consumer confidence deteriorated notably in August, according to the economic sentiment indicator (ESI), released yesterday by the European Commission.
The headline ESI dropped 1.8 points in the Eurozone, leaving it at 86.1, following its sharp decline across most of the last two years – 100 represents the long-term average. The euro area was hit by a severe loss of confidence in the service industry but the industrial sector was broadly flat.
Retail purchasing managers’ index (PMI) business surveys were also gloomy across Europe, with sharp declines in Italy and France, and even Eurozone powerhouse Germany seeing stagnation in its retail sector.
Across the Eurozone as a whole, the retail PMI declined to a three-month low of 44.4 – 50 indicates no change – indicating sharper decline.
France also recorded the sharpest fall in sales for three months, as the panel of 300 retailers returned a figure of 44.2 for August, down from 46.7 in July, and suggesting accelerating decline. Italy also hit a three-month low, at a rock bottom 37.1 – marking the eighteenth successive month of retail retrenchment. And Germany crept into negative territory as its figure fell to a four-month low of 49.9.
Despite this retail woe, Italy had a successful bond auction, selling €7.29bn of new debt, at a 10-year rate well under six per cent.
Analysts suggested this stability was due to expected support from the European Central Bank (ECB).