Home » Currency Note » Currency Note » Currency Note EUR » EUR: morale in the eurozone continues to slip

On what was an extremely busy day for the eurozone, we saw further evidence that morale across the euro area is sliding. The economic sentiment index dropped to 106.2 in January from 107.4 the previous month and below expectations of 106.8. It is the seventh consecutive month of declines and is the lowest reading since November 2016. The business confidence reading wasn’t much better, as it decreased by 0.17 points to 0.69 this month. It is the lowest reading for exactly two years.

February’s Gfk consumer confidence reading from Germany unexpectedly rose to 10.8 from an upwardly revised 10.5 the previous month and above market expectations of 10.3. It is the highest reading since May 2018 and is mainly down to increases in income expectations and the public’s willingness to buy. Consumer confidence in the eurozone came in as expected by remaining unchanged at -7.9. The preliminary estimate of Germany’s inflation rate for January shows it is expected to ease to 1.4% from 1.7% the previous month and below the 1.6% economists predicted. If it proves to be correct, it will be the lowest inflation rate since February 2018.

It is another busy day as far as economic data from the eurozone is concerned. We will see December’s retail sales figures from Germany, as well as the unemployment rate for January. This is expected to hold steady at 5%. We will also see the flash reading of the eurozone’s GDP growth rate for the fourth quarter of 2018. Year-on-year, it is expected to dip to 1.2% from 1.6% the previous period.

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