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Euro zone sentiment drops to two-year low at start of 2019

Euro zone sentiment drops to two-year low at start of 2019
FILE PHOTO: General view of the skyline of La Defense business district with its Arche behind Paris' landmark, the Arc de Triomphe and the Champs Elysees Avenue in Paris, France, January 13, 2016. REUTERS/Charles Platiau   -   Copyright  Charles Platiau(Reuters)
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By Philip Blenkinsop

BRUSSELS (Reuters) – Euro zone economic sentiment fell by more than expected to a two-year low in January as all components except consumers and the construction sector became more pessimistic about the bloc’s prospects at the start of the year.

Euro zone economic sentiment slipped to 106.2 points in January from a slightly revised 107.4 in December, the European Commission said, marking the seventh consecutive monthly fall and the lowest level since November 2016.

Economists polled by Reuters had expected a less sharp decline to 106.8, with a depressed mood among retailers providing an extra shove down.

The worse-than-expected sentiment numbers come a day before Eurostat’s release of its first estimate for economic growth in the 19-member euro zone. It is seen holding at a modest 0.2 percent quarter-on-quarter in the last three months of 2018. This would match the four-year low of the third quarter.

Sentiment in industry fell to 0.5 points in January from 2.3 in December, in line with market expectations.

The mood of consumers picked up to -7.9 after December’s steep fall to -8.3.

However, retail trade sentiment slipped to -1.9 points in January from -0.1 in December.

Sentiment in services, a sector which produces two thirds of the euro zone GDP, went down to 11.0 points, almost matching expectations of a 11.1 reading.

A separate business climate indicator, which helps point to the phase of the business cycle, also decreased in January to 0.69 from 0.86 in December, below expectations of a drop to 0.75. This was the lowest reading since January 2017.

(Brussels newsroom)

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