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Germany, Italy drive euro zone economic sentiment down to three-year low

Germany, Italy drive euro zone economic sentiment down to three-year low
FILE PHOTO: A general view shows the atrium of the Mall of Berlin shopping centre during its opening night in Berlin, Germany, September 24, 2014. REUTERS/Thomas Peter -
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BRUSSELS (Reuters) – Euro zone economic sentiment dropped to its lowest point in nearly three years in June as confidence fell markedly in the bloc’s largest economies, and mostly in Germany and Italy, European Commission data showed on Thursday.

The Commission said that its main indicator of economic confidence dropped to 103.3 points in June from 105.2 a month earlier, reaching its lowest level since August 2016.

June’s large fall capped a semester in which sentiment dropped in each month, except May, sending another stark warning over the health of the 19-country bloc’s economy which is grappling with weak growth and low inflation.

The fall was also bigger than market forecasts of a fall to 104.6.

The largest falls in confidence were recorded in Germany, the biggest economy of the bloc, and Italy, its third major economic power, the data showed.

The indicator in Germany fell by 2.9 points, and in Italy by 1.5 points. Confidence decreased also in France, the Netherlands and Spain.

Sentiment in the industry sector plunged by 2.7 points, the largest drop in about eight years, equalled only by a similar fall in April, the Commission said, as the export-driven sector suffers from global trade tensions.

Business managers were also pessimistic about the euro zone’s services sector, which posted a drop of 1.1 points.

Consumer confidence went down by 0.7 points, but did not affect sentiment in the retail trade sector, which instead rose by 1.0 points.

In a separate release, the Commission said that its business climate indicator, which helps point to the phase of the business cycle, declined to 0.17 in June from 0.30 in May for its fourth consecutive monthly drop.

Economists polled by Reuters had predicted a more limited fall to 0.23.

(Reporting by Francesco Guarascio @fraguarascio; editing by Foo Yun Chee)

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