Euro Area: Economic sentiment continues to strengthen in September but remains in pessimistic territory

Euro Area Economic Sentiment September 2020

Euro Area: Economic sentiment continues to strengthen in September but remains in pessimistic territory

Sentiment in the Eurozone recovered further lost ground in September from August, climbing to 90.2 points from August’s 86.8, although it remained far below February’s pre-crisis level and deeply entrenched below its long-run average of 100 points.

September’s rise came on the back of improving sentiment in the industry, construction, retail, trade and services sectors. Moreover, financial services confidence swung from pessimistic to optimistic territory. Confidence in the services sector increased the most, although consumer sentiment in the sector only gained a little ground. Moreover, another rise in employment expectations was recorded across all surveyed sectors.

The improvement was broad-based across the Euro area’s largest economies: Sentiment firmed notably in France and Italy, although it increased at a more moderate pace in Germany, the Netherlands and Spain, where only 55% of the confidence lost during the lockdown has been recovered so far.

Commenting on the release, Bert Colijn, senior Eurozone economist at ING, stated:

“The first few months after the eurozone economy reopened after strict lockdowns showed a fast rebound in activity. Today’s ESI indicates that the eurozone economy is already showing signs of rebound fatigue in September and second wave worries add to expectations of further slowing of economic growth. More measures are being taken to tackle the virus, which will not necessarily have a strong impact on the 3Q growth figures, but will be very relevant for GDP growth in 4Q.”

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