Analysis: EMU September Economic Morale Weaker Than Expected
September — MNI analysts survey — August Revised
lowest median highest from
Econ Sentiment 95.0 93.0 96.0 97.9 98.4 98.3
Industry -5.9 na na na -2.7 -2.9
Services 0.0 na na na 3.7 —
Consumers -19.1 na na na -16.5 —
Retail -9.8 na na na -8.7 —
Construction -26.0 na na na -23.4 -23.3
Business Climate: -0.06 na na na +0.06 +0.07
FRANKFURT (MNI) – Economic sentiment in the Eurozone weakened more
than generally expected in September, with declines across all
components of the index, the European Commission reported on Wednesday.
Extending the run of consecutive drops to seven months, September’s
3.4-point slide knocked the headline figure to 95.0, its lowest point
since December 2009.
The stronger-than-expected decline in economic sentiment follows a
raft of soft indicators this month and confirms signals for that the
Eurozone’s economy is rapidly slowing.
Among the larger Eurozone states, the sharpest falls were noted in
Italy (-5.1 points) and France (-3.5), followed by Germany (-2.1), Spain
(-1.8) and the Netherlands (-1.7).
With the exception of retailing, all sectors suffered a drop in
output expectations led by industry, the production outlook for which
fell to its most pessimistic level in nearly two years.
The retailing sector was also the only one where selling price
expectations increased, albeit only slightly, while further downward
movements were seen in industry, services and construction.
The three-point drop in industry morale was largely due to
production expectations, as well as companies’ worsening order books
assessment. A growing proportion of business managers also assessed
their inventories as “too large”, the Commission report added.
The Commission’s separately-reported Business Climate Indicator
also weakened sharply in September, falling to its lowest level since
early last year.
“The steady fall observed since March indicates a further slowdown,
although growth in euro-area industry output remains positive,” the
In services, sentiment dipped 3.7 points, with respondents growing
more pessimistic about both the current situation and the near-term
Weighed down by falling activity levels in both the manufacturing
and services sectors, Markit Economics’ September composite PMI (49.2)
fell into contraction territory for the first time in over two years,
suggesting stagnant economic growth in 3Q.
“Furthermore, the forward-looking indicators, notably an increased
rate of decline of incoming new business and falling confidence about
the year ahead in the service sector, raise the risk of further
contraction in the coming months,” Markit Chief Economist Chris
Williamson said in a press release.
Today’s European Commission report showed sentiment in the
financial services, which is not seasonally adjusted, fell deeper into
negative territory this month. Downward revisions were noted across the
sub-indicator, with the exception of demand expectations over the next
three months, which rebounded modestly.
Retail sector morale weakened by 1.1 points in September to below
the long-term average, mostly due to respondents’ view of their present
In construction, sentiment fell for the third consecutive month,
reaching its lowest level since January, as orders books continued to be
viewed less satisfactorily.
In line with the deterioration in employment expectations across
the private sector, consumers’ jobless fears continued to grow, helping
to drag down household sentiment to two-year lows.
As jobless fears grew, optimism regarding consumers’ financial
outlook declined, as well as respondents’ outlook for the economy as a
On a slightly more positive note, consumers modestly revised up the
likelihood of making large purchases over the next year, as a smaller
proportion of households saw prices trending upwards in the short term.
— Frankfurt bureau; +49-69-720 142; email: email@example.com —