August MNI analysts survey July rev from
lowest median highest
Econ Sentiment 86.1 86.5 88.0 89.0 87.9 —
Industry -15.3 -17.0 -14.8 -13.4 -15.1 -15.0
Services -10.8 -9.0 -8.5 -7.6 -8.5 —
Consumers -24.6 na na na -21.5 —
Retail -17.3 na na na -15.0 —
Construction -33.1 na na na -28.5 -28.4
Business Climate: -1.21 -1.3 -1.3 -1.2 -1.27 —

PARIS (MNI) – Eurozone economic morale once again eroded more than
expected in August, with a deterioration in all categories led by
construction, the European Commission said Thursday.

After a 6.6-point slide since March, the Commission’s sentiment
index fell another 1.8 points in August to a three-year low of 86.1,
nearly 14 points below the long-term average.

The results suggest the economy is heading deeper into recession,
whereas the composite PMI polls have come off lows in recent months,
regaining 0.6 point since May to 46.6 in August.

Among the larger economies, Spain was hit hardest (-4.9 points),
followed by Italy (-2.4) and Germany (-1.0), while sentiment improved
somewhat in France (+0.4) and the Netherlands (+0.6).

Industry morale failed to stabilize as most analysts had hoped. An
improvement in producers’ assessment of recent output, inventory levels
and export order books was outweighed by a deterioration in production
prospects and total order books.

By contrast, the Commission’s separate Business Climate Indicator
unexpectedly regained 0.6 point to -1.21 after a 1.13-point slide since
February. Here an improvement in managers’ assessments of past
production, export order books and finished goods stocks, offset weaker
production expectations and assessments of overall order books.

Services sentiment also eroded more than expected to the lowest
level in three years. Providers said recent activity had weakened
markedly and expected demand to lose further steam in the near term.

However, morale in financial services improved marginally after a
stronger upturn in July, surpassing slightly the level seen in May. This
was due mainly to a further improvement in expected demand, which offset
a downturn in recent activity and employment.

The Commission’s flash estimate for consumer sentiment was
confirmed to show a 3.1-point drop to a 38-month low of -24.6.
Households were more worried about overall economic and especially labor
market trends than the future impact on their own financial situation.
Inflation worries mounted further to a four-month high. While households
said they were now cutting back more on major purchases, they hoped to
loosen their belts slightly in the year ahead and put less money aside.

Retailer sentiment eroded further as well, approaching the recent
low in May. Firms noted a marked drop in current business and, expecting
the trend to continue in coming months, planned steeper cutbacks in

Construction morale suffered the sharpest setback, falling to the
lowest level in over three years. Builders said recent activity had
weakened and order books were being depleted faster.

Hiring prospects deteriorated in all sectors except for retailing
and financial services. Selling-price expectations declined in the
services and construction sectors, while rising in industry and

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