Economic Confidence in Eurozone Declines in August
The economic confidence in the eurozone continues to decline in August, reflecting a concerning trend of deteriorating sentiment among businesses and consumers. Factors such as high interest rates and rising inflation have played a significant role i...
Troy D. Hanson
August 30, 2023
The economic confidence in the eurozone took another hit in August, as both businesses and consumers grew increasingly pessimistic. According to data from the European Commission released on Wednesday, the bloc's economic sentiment indicator dropped to 93.3 in August from 94.5 in July.
A Challenging Trend
This reading was slightly lower than the economists' consensus expectation of 93.4, as indicated by a Wall Street Journal poll. For the fourth consecutive month, confidence has continued to deteriorate, reflecting a concerning trend.
Industry and Consumer Outlook
Industrial confidence fell from minus 9.3 to minus 10.3 in July, matching forecasts. Similarly, consumer confidence declined from minus 15.1 to minus 16.0, meeting economists' expectations. Both indicators highlight the overall decline in sentiment across various sectors.
Factors Behind the Dismal Sentiment
The persistently high interest rates within the eurozone have placed a significant burden on demand, hampering economic growth. Additionally, rising inflation has eroded household spending power, further exacerbating the gloomy outlook. Indeed, early August data revealed an increase in price rises in Spain and the influential German state of North Rhine-Westphalia.
Mixed Performance Among Major Economies
In August, France, Germany, and Italy - the three largest economies in the eurozone - all witnessed a deterioration of sentiment. However, Spain, the fourth-largest economy, recorded a slight improvement in confidence, offering a glimmer of hope amidst the overall negative trend.