The European Commission’s monthly sentiment survey showed the overall index for the 19 member states of the Eurozone at 102.7 points in July, down from 103.3 in June and 105.2 in May.
The summer’s expected economic slowdown aligns with the seasonal trend and with what the economists anticipated as a deterioration.
Worries about Eurozone’s economic growth persists in the third quarter of 2019, as the economic sentiment continues to decline in July. While consumer confidence improved, businesses shared a view of deteriorating sentiment across sectors, sending worrying signals to the service sector. Cautious optimism is partly justified as the deterioration was seen as a decrease of future demand expectations.
Last week, European Central Bank’s President Mario Draghi proposed a further easing of the monetary policy amid the deteriorating growth outlook. Draghi even hinted at a reinterpretation of the inflation target, while a cut in interest rate this September is highly anticipated by economists.
The fall of the sentiment index in July was caused mainly by lower optimism in industry, where the index fell to -7.4 from -5.6, an easing in services to 10.6 from 11.0 a fall in retail trade to -0.7 from 0.1 an in construction to 5.0 from 7.6.
The sentiment among consumers, however, has improved to -6.6 from -7.2.from June to July.
The European Commission’s business climate indicator, which points to the phase of the business cycle, plunged to -0.12 points in July from 0.17 in June, has reached its lowest reading since September 2013.
The EU executive’s inflation expectations among Eurozone consumers a year ahead fell to 20.6 in July from 21.9 in June and 23.2 in May and selling price expectations in the manufacturing sector declined to 1.7 in July from 3.2 in June and 5.3 in May.