–Replaces Outdated Story Sent At 9:05 GMT
Oct — MNI analysts survey — Sep Revised
lowest median highest from
————————————————————————
Econ Sentiment 104.1 102.5 102.8 105.0 103.2 —
Industry 0 -3 -2 -1 -2 —
Services +8 na na na +8 —
Consumers -11 -11 -11 -11 -11 —
Retail -1 na na na -1 —
Construction -25 na na na -26 —
————————————————————————
Business Climate: +0.98 na na na +0.76 +0.77
————————————————————————
PARIS (MNI) – Economic morale in the Eurozone surprised on the
upside again in October, with an unexpected improvement in industry
flanked by less pessimistic sentiment in construction, the European
Commission said Thursday.
After an unexpected 0.9-point rise in September, the Commission’s
sentiment indicator gained another 0.9 point to 104.1, the highest level
since January 2008 and 4.1 points above the long-term average.
Apart from a setback in May, when the series was revised, economic
morale has recovered steadily from the record low early last year. But
gains in the headline index have become gradually smaller in recent
months, confirming expectations for a slowdown in growth as global
demand loses steam.
A similar trend can be observed in the PMI polls, where the
Eurozone composite index has fallen from 56.7 in July to 53.4 in
October, pointing to more moderate growth in 4Q. The slowdown is most
evident in Spain, where fiscal consolidation measures have been
particularly drastic, and in the cooling of France’s services sector.
Germany’s PMI results have been more resilient and even improved in
October.
While the impact of the global slowdown in the Eurozone so far has
been milder than many had feared, the strength in the euro is likely to
accentuate the trend in the months ahead.
Among the largest Eurozone countries, the strongest monthly
sentiment gains in October were registered in France (+3.4), followed by
the Netherlands (+2.8), Germany and Italy (both +0.3). Sentiment eroded
slightly in Spain (-0.2).
Industry sentiment gained two points in October to stand eight
points above the long-term average. Producers’ assessment of recent and
expected activity both rose two points. Their view of order books rose
four points, with export order books up three points.
Manufacturers said orders on hand would assure 3.3 months of
activity, up from 3.2 months in July, and expected stronger exports
ahead. Manufacturing capacity utilization climbed from 77.2% in July to
77.6% in October, still 3.5 points below average.
The Eurozone flash factory PMI showed output (53.8) slowing further
from the recent peak in July (58.7). But a pick-up in new orders (54.3)
seen in both Germany and France could limit the loss of momentum in the
next months.
The Commission’s separate Business Climate Indicator was also
firmer in October (see below).
Sentiment in the services stabilized in October, despite a modest
improvement in most components. While providers said recent demand had
waned slightly, their assessment of recent activity rose two points and
their outlook for near-term demand gained one point, the smallest
monthly increase since July.
Confidence in financial services, which is not included in the ESI,
fell back three points to a seven-month low, dragged down by an
eight-point drop in recent activity. Demand was expected to recover
slightly in coming months.
The Eurozone flash services PMI showed activity in October
expanding at the slowest pace (53.2) since February, mainly reflecting
the trend in France.
As indicated by the Commission’s flash estimate, consumer sentiment
was stable again in October, just two points above the long-term
average. While consumers’ assessment of their recent and future
financial situation was unchanged, they said they were making a few more
large purchases now, but expected no further increase over the next 12
months.
Consumers said overall economic conditions had improved and
expected the trend to continue, though at a slower pace. Nevertheless,
unemployment concerns rose in October after seven months of decline,
while remaining below the long-term average.
Retail sentiment was also overall unchanged on the month. The
ongoing pick-up in recent turnover and prospects of further, though more
modest gains ahead were offset by a marked increase in stocks, leaving
order plans unchanged.
Construction morale edged up another point after a three-point jump
in September, as gains in most countries offset a marked erosion in
Spain and Portugal. Overall, builders reported a marked improvement in
recent business and orders, although both components remained well below
long-term averages.
Sales price expectations in October were unchanged in industry,
rose two points in the services and five points in construction.
Retailers’ price outlook fell back two points. The price outlook was
above average in industry and the services, slightly below average in
retailing and far below in construction.
Hiring prospects improved in all sectors except for construction
and the financial services, where they deteriorated.
The Commission’s separate Business Climate Index rose 0.22 point in
October, the largest monthly gain since July, to reach a 38-month high
of +0.98. Gains in components were led by producers’ assessment of order
books and foreign order books, the Commission said.
“The level of the indicator suggests that economic activity in
industry will continue to recover in the coming months,” it added.
–Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com
[TOPICS: M$XDS$,M$X$$$,MT$$$$]
