Facebook Blogging

Edward Hugh has a lively and enjoyable Facebook community where he publishes frequent breaking news economics links and short updates. If you would like to receive these updates on a regular basis and join the debate please invite Edward as a friend by clicking the Facebook link at the top of the right sidebar.

Wednesday, July 30, 2008

EU Sentiment Indicator For The Eurozone Declines Sharply In July

Economic sentiment in the euro zone deteriorated much more than expected in July to reach its lowest level in over 5 years. In fact Europeans' confidence in the outlook for the economy dropped the most since the Sept. 11 terrorist attacks as soaring energy costs and the euro's advance against the dollar wieghed down on both consumers and executives, with the economic sentiment indicator falling to 89.5 points, its lowest since March 2003, from a downwardly revised 94.8 in June.

Sentiment in industry declined by 3 points to -8, among consumers by 3 points to -20, in the retail sector by 5 points to -9, and in construction by 3 points to -14. The services sector, which generates more than two thirds of the 15-country euro zone's gross domestic product, saw the steepest decline, by 8 points to 1. After the news was announced the euro slipped briefly from a session high against the dollar and bund futures rose.

The figures were the latest in a string of weak data, which may may point to a continuing contraction in the eurozone into the third quarter of 2008 following the now more or less inevitable contraction in the previous three months (Q2).

In Spain, we learnt this morning that retail sales suffered a record plunge year-on-year in June as a severe economic slowdown began to slam both multinational and domestic retailers.

The European Commission also said this morning that its Business Climate Indicator (BCI), which helps establish the phase of the business cycle, fell to -0.21 point in July from 0.13 in June, hitting its lowest since May 2005.Worsening business morale was accompanied by a slight fall in consumer inflation expectations for the next 12 months to 30 points from 31, the data showed.

Industry selling price expectations, however, jumped to 20 points from 16 in June, providing a mixed picture for the European Central Bank, which sees struggling to tame resurgent inflation as its principal responsibility at this point.

No comments: