The European Commission also reported at the end of last week a further steep decline in its eurozone “economic sentiment” indicator for February, with the composite number reaching its lowest level since December 2005. The indicator, which gauges optimism across all economic sectors and is regarded as a good guide to likely future trends, fell to 100.1 points in February from 101.7 in January.
This seems to imply a significant deceleration in activity, although the picture is very variable. France is holding up better than most, and Germany (as explained here) is hanging on in more than I personally expected, but Italy is very much in the doldrums already, and the two "construction driven" eurozone economies (Spain and Ireland) are in strong downward retreat.
The countrywide fall was led by the service sector but the index for Spain, were the impact of a bursting property bubble is in the forefront of everyone's mind, was especially pronounced. With a reading of 87.5 the indicator hit its lowest level since January 1994. Italy’s index also dropped steeply, to the lowest level since August 2005.
The fall was led by the region’s service sector but the index for Spain, hit by fears of a bursting property bubble, was particularly gloomy. It plunged to the lowest level since January 1994. Italy’s index also dropped steeply, to the lowest level since August 2005.
In contrast, Germany reported an increase in confidence – and the overall fall in eurozone manufacturing industry’s optimism was significantly less than in the services sector. Meanwhile, eurozone unemployment was at a record low of 7.1 per cent in January, according to Eurostat, the European Union’s statistical office.
The results remained consistent with a slowdown across the eurozone, but no dramatic drop overall and with Germany and France propping up growth to some extent.