Eurozone sees sentiment decline
Source: Agencies |
July 29, 2011, Friday
|
Print Edition
Print Edition
ECONOMIC sentiment in the eurozone worsened more than expected this month with optimism fading in all sectors, data showed yesterday, signaling slower expansion of the economy in the second half of this year.
The European Commission's monthly sentiment index, based on a survey of businessmen and consumers across the 17-nation eurozone, fell to 103.2 in July from 105.4 in June. This month's figure was the lowest reading since 102.2 in August 2010.
The index has fallen every month since February. Analysts polled by Reuters had expected a fall to 104 in July.
"It is a clear soft patch, worse than expected. Bad news, clearly. We are on a downward trend since the start of the year," said Carsten Brzeski, economist at ING.
He and other analysts said sentiment had been hit by the sovereign debt crises in several weak eurozone states, as well as by signs of weaker growth in countries such as China and the United States. But they said the eurozone was probably not heading back into recession, after emerging from one in 2009.
"Given eurozone fundamentals remain sound, we stick to our view that this is not the beginning of a new downturn, but rather a mid-cycle slowdown," said Chiara Corsa, economist at Unicredit.
The Commission said sentiment in industry worsened to 1.1 from 3.5, in services to 7.9 from 10.1, and among consumers to -11.2 from -9.7.
"Today's data signal the slowdown is set to continue in the second half of the year. The Composite Purchasing Managers Index released last week showed a similar trend," said Clemente De Lucia, economist at BNP Paribas.
The sentiment data, as well as market jitters about Italy's ability to cope with its sovereign debt, pushed the euro down to around US$1.4280 yesterday from US$1.4370.
Combined with continued pressure for higher inflation in the eurozone, the data may sharpen the European Central Bank's dilemma over whether to raise interest rates further this year, after a 0.25 percentage point hike this month.
Although the survey showed selling price expectations among manufacturers fell sharply in July to 12.5 from 16.1, consumer inflation expectations 12 months ahead inched up to 25.4 from 24.6.
"The ECB currently seems minded to raise interest rates again before the end of 2011," said Howard Archer, economist at IHS Global Insight.
"However... we suspect that markedly slower eurozone growth and likely recurrent sovereign debt tensions will present an increasingly compelling case for the ECB to hold off from further monetary policy tightening this year."
The European Commission's monthly sentiment index, based on a survey of businessmen and consumers across the 17-nation eurozone, fell to 103.2 in July from 105.4 in June. This month's figure was the lowest reading since 102.2 in August 2010.
The index has fallen every month since February. Analysts polled by Reuters had expected a fall to 104 in July.
"It is a clear soft patch, worse than expected. Bad news, clearly. We are on a downward trend since the start of the year," said Carsten Brzeski, economist at ING.
He and other analysts said sentiment had been hit by the sovereign debt crises in several weak eurozone states, as well as by signs of weaker growth in countries such as China and the United States. But they said the eurozone was probably not heading back into recession, after emerging from one in 2009.
"Given eurozone fundamentals remain sound, we stick to our view that this is not the beginning of a new downturn, but rather a mid-cycle slowdown," said Chiara Corsa, economist at Unicredit.
The Commission said sentiment in industry worsened to 1.1 from 3.5, in services to 7.9 from 10.1, and among consumers to -11.2 from -9.7.
"Today's data signal the slowdown is set to continue in the second half of the year. The Composite Purchasing Managers Index released last week showed a similar trend," said Clemente De Lucia, economist at BNP Paribas.
The sentiment data, as well as market jitters about Italy's ability to cope with its sovereign debt, pushed the euro down to around US$1.4280 yesterday from US$1.4370.
Combined with continued pressure for higher inflation in the eurozone, the data may sharpen the European Central Bank's dilemma over whether to raise interest rates further this year, after a 0.25 percentage point hike this month.
Although the survey showed selling price expectations among manufacturers fell sharply in July to 12.5 from 16.1, consumer inflation expectations 12 months ahead inched up to 25.4 from 24.6.
"The ECB currently seems minded to raise interest rates again before the end of 2011," said Howard Archer, economist at IHS Global Insight.
"However... we suspect that markedly slower eurozone growth and likely recurrent sovereign debt tensions will present an increasingly compelling case for the ECB to hold off from further monetary policy tightening this year."
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
