Euro Area: Economic sentiment falls in July

Euro Area Economic Sentiment July 2022

Euro Area: Economic sentiment falls in July

Sentiment in the Eurozone fell to 99.0 in July from 103.5 in June. The index therefore moved below its long-run average of 100. Sentiment in the construction, industry, services and retail sectors declined. Moreover, employment expectations weakened, and consumer sentiment declined in the month. Meanwhile, selling price expectations moderated in all sectors.

In terms of specific countries, sentiment decreased in France, Germany, Italy and Spain, while it ticked up in the Netherlands.

Bert Colijn, senior economist at ING, commented:

“The rapidly cooling economy means that inflationary pressures are starting to abate somewhat. […] To be sure, inflation will remain far too high in the coming quarters on the back of rising energy prices and some second-round effects that will still materialize. But underlying inflation should have peaked in the first half of 2023 at the latest. While we still believe that the ECB will deliver an additional 50bp rate hike over the coming months, the specter of a full-blown recession is likely to halt the tightening cycle before the end of this year.”

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