Nov — MNI analysts survey — Oct Revised from
lowest median highest
———————————————————————–
Econ Sentiment 93.7 92.8 94.1 94.8 94.8 —
Industry -7.3 -9.6 -7.5 -7.0 -6.5 -6.6
Services -1.7 0.0 0.0 1.0 0.1 0.2
Consumers -20.4 -20.4 -20.4 -19.6 -19.9 —
Retail -11.0 na na na -9.7 -9.8
Construction -24.8 na na na -25.1 -27.5
———————————————————————–
Business Climate: -0.44 -0.3 -0.3 -0.2 -0.19 -0.18

PARIS (MNI) – Economic morale in the Eurozone eroded somewhat more
than generally expected in November, with declines in all main sectors
except construction and financial services, the European Commission said
Tuesday.

After a 13.2-point slide since February, the Commission’s sentiment
index slipped another 1.1 points in November to a two-year low of 93.7.

Alongside the deterioration in other leading indicators, this
confirms the loss of economic momentum in 4Q. With headwinds mounting
from monetary tightening in many emerging markets and fiscal tightening
throughout the Eurozone, activity is likely to remain lethargic at best
for an extended period.

Among the largest economies, France sustained the biggest decline
(-3.7 points), followed by the Netherlands (-1.8) and Germany (-0.1).
Modest gains were registered in Spain (+0.2) and Italy (+0.8). Only in
Germany is the index still above average.

Industry morale fell slightly less than generally expected in
November, though it still hit a 19-month low as weaker export orders
dampened output prospects. Producers reported declines in recent output
and excessive inventories.

The Commission’s separate Business Climate Indicator fell more
than expected to a 21-month low, on growing pessimism about total orders
and export orders and production prospects. Recent production was judged
weaker and stocks higher.

The Eurozone factory PMI for November showed output declining for
the fourth month in a row (46.4) and total orders falling at the fastest
pace in 30 months (42.1).

Sentiment in the services was weaker than most analysts had
expected, falling 1.8 points to a 22-month low. Providers said recent
turnover had fallen off markedly, and they expected demand to weaken
further in the near term.

By contrast, morale in the financial services, which is not
seasonally adjusted, recovered in November, retracing over a third of
the steep drop in October on firmer recent activity. But demand
expectations weakened further to stand well below the long-term average.

The Eurozone services PMI showed activity and new business
contracting somewhat less rapidly in November, but expectations at the
12-month horizon continued to erode.

The Commission’s flash estimate for consumer sentiment was
confirmed at 25-month low of -20.4, also well below the long-term
average. Households said their financial situation had deteriorated and
they expected the trend to continue. They feared the economy would
weaken further, with a negative impact on the job market. Inflation
worries also ticked higher. Nevertheless, buying propensity recovered.

The erosion in retail sentiment to the lowest level in 25 months
reflected weaker recent turnover, rising inventories and expectations of
a further slowdown ahead.

In construction, where morale has been in the doldrums for years,
November brought another modest recovery, largely reflecting a rebound
in the Netherlands but also in Germany. While recent activity was judged
markedly weaker, order books were viewed less pessimistically.

Selling-price expectations weakened in the services and production,
but improved in industry and retailing. Apart from the services and
retailing, hiring prospects deteriorated in all business sectors.

–Paris newsroom +331 4271 5540; email: ssandelius@marketnews.com

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