Eurozone economic sentiment deteriorated to a 9-month low in May as the currency bloc experienced slower growth, survey results from the European Commission revealed Wednesday.
The economic confidence index dropped to 112.5 in May from 112.7 in April. This was the lowest reading since August 2017, but above the expected score of 112.0.
Given that the survey does not account for the Italian political turmoil, it’s safe to say that moderating growth continues to be the message of 2018, Bert Colijn, an ING economist, said.
The months ahead are likely to see uncertainty continue as the Italian political crisis could drag on during the summer, the economist added.
Elsewhere, the Organization for Economic Cooperation & Development forecast Eurozone to grow 2.2 percent in 2018 and 2.1 percent next year as accommodative monetary policy, fiscal support and improving labor markets are supporting domestic demand.
Survey data from the EU showed that decreases in industry and services confidence were largely offset by strong increases in the retail trade and construction sectors.
The industrial confidence index came fell to 6.8 from 7.3 in April. Declining industry confidence resulted from managers’ markedly more pessimistic production expectations and worsened views on the stocks of finished products.
Likewise, the indicator for services slid to 14.3 from 14.7. The marginal fall in services confidence was mainly due to a decrease in managers’ assessment of past demand.
Meanwhile, the confidence index in retail trade rose to 0.7 from -0.7 a month ago. All components of the indicator strengthened in May with better improvements in managers’ assessments of the present business situation and the adequacy of the volume of stocks.
The construction sentiment index advanced to 7.0 in May, the highest since 1990, from 4.6 in April. This notable rise was fueled by important upward revisions of both managers’ employment expectations and their assessment of the level of order books.
The consumer confidence index dropped marginally to 0.2 from 0.3 in April. The score came in line with the flash estimate.
Another survey showed that the business confidence index rose marginally to 1.45 in May from 1.39 in April. Managers’ appraisals of their overall and export order books improved markedly, while their assessment of past production remained virtually unchanged.
By contrast, managers’ production expectations worsened substantially as did, to a lesser extent, their appraisals of the stocks of finished products, survey showed.