October — MNI analysts survey — September Revised
lowest median highest from
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Econ Sentiment 94.8 92.5 93.3 94.5 95.0 —
Industry -6.6 na na na -5.9 —
Services 0.2 na na na 0.0 —
Consumers -19.9 na na na -19.1 —
Retail -9.8 na na na -9.8 —
Construction -25.3 na na na -26.6 -26.0
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Business Climate: -0.18 na na na -0.06 —
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FRANKFURT (MNI) – Eurozone economic sentiment for October came in
stronger than even the most optimistic forecasts had expected, with
modest improvements in service and construction sector morale partially
offsetting declines in industry and household confidence, the European
Commission reported on Thursday.
Slipping only 0.2 point this month, the Commission’s morale
indicator came to 94.8. Nevertheless, the figure remains at its lowest
level since December 2009 and well below the long-run average of 100.
Among the larger Eurozone states, the sharpest declines were noted
in Germany (-0.8), followed by the Netherlands (-0.6) and Spain (0.1).
On the other hand, France recovered slightly (+1.2) after three
months of decreases. Sentiment in Italy (+0.3) also improved.
The weaker Commission figures are only the latest in a long line of
recent indicators pointing to decelerating growth across the Eurozone,
as continued uncertainty regarding the debt crisis and reduced client
demand weigh on confidence.
Falling for the eighth month in a row, the industrial confidence
indicator slipped below the long-run average, with a majority of firms
assessing new orders as poor and recent production trends worsening.
Respondents also reported that capacity utilisation fell further
below the norm in 3Q. With the bulk of manufacturers expecting
production to decline in the near term, utilisation is likely to fall
further.
One bright spot for the manufacturing sector, however, was the
estimated number of months’ production assured by orders on hand, which
remained above average in the third quarter.
Employment expectations in the sector also worsened, with a growing
proportion of respondents looking to cut staff in October. Selling
price expectations fell.
In its separately-reported Business Climate Indicator, the
Commission reported that sentiment hit a 20-month low, mainly due to a
gloomier assessment of production trends, as well as a bleak outlook for
overall and foreign demand.
“The steady fall observed since March points to a significant
slowdown in industrial production growth,” the Commission said.
In services, sentiment brightened slightly, as the short-run demand
outlook improved and selling price expectations rose. Confidence,
however, remains below the long-run average, with the bulk of service
providers still assessing their current business situation negatively,
as demand fell.
A declining proportion of firms also look to take on additional
staff in the near term, though a growing majority were looking to hike
prices.
Weighed down by drops in output and new orders in the private
sector, the composite Purchasing Managers Index (PMI) fell to its lowest
level since mid July, signalling a “heightened risk of the Eurozone
sliding back into recession,” according to Markit, which produces the
PMI reports.
“Forward-looking indicators, such as the further lowering of
expectations of services growth in the year ahead and the near-stalling
of job creation, suggest that companies are bracing themselves for the
situation to continue to deteriorate,” Markit added.
In the financial services sector, which is not included in the
services sector component, sentiment plummetted to a 31-month low, with
both the demand and employment outlooks falling further below their
long-run averages.
Heralding the fall in the Commission’s sub-indicator, the Sentix
Eurozone investor sentiment reported further weakness in morale, falling
to its lowest level since July 2009.
Confidence among retailers was unchanged in October, despite a
deteriorating current situation and future business outlook. A growing
proportion of retailers also reported a reduced intention to place
orders, while also looking to reduce their workforce. Selling price
expectation were also cut.
Construction sentiment rose in October, partially parring losses
suffered in September, on the back of better order books and higher
employment expectations.
Activity trends also improved in the construction sector, while
selling price expectations recovered.
Weighed by a gloomy outlook for both their personal finances and
the general economic situation, household morale continued to
deteriorate in October, reaching its lowest level in over a year.
In line with the fall in employment expectations across all major
except construction, consumers’ jobless fears continued to build. While
the bulk of households still saw price trending downwards in the coming
months, a growing majority looked to put off major purchases, including
buying a home or new car.
— Frankfurt bureau; +49-69-720 142; email: frankfurt@marketnews.com —
[TOPICS: M$XDS$,M$X$$$,MT$$$$,MTABLE]
