Euro Area: Economic sentiment drops further in July

Euro Area Economic Sentiment July 2023

Euro Area: Economic sentiment drops further in July

Sentiment in the Eurozone fell to 94.5 in July from 95.3 in June. Consequently, the index moved further below its long-run average of 100, signaling persistent albeit moderate pessimism.

Sentiment in the construction, industry and services sectors decreased. Moreover, employment expectations weakened. However, consumer confidence gained some further ground. Meanwhile, selling price expectations eased in the industry, retail trade and construction sectors and remained broadly flat in the services sector.

In terms of specific countries, sentiment declined in France, Germany and the Netherlands while it rose in Italy and Spain.

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

“Economic sentiment dropped for the third month in a row in July, confirming the view provided by the IFO and PMI that the economy is going through a sluggish phase. With GDP growth already trending around the zero line, this means that the risk of recession is increasing somewhat. Still, a prolonged economic slump is not our base case at the moment.”

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