2023.02.0611:22:00UTC+00Rise In Eurozone Sentix Investor Confidence Eases Recession Fears

Eurozone investor confidence strengthened to hit an 11-month high in February, replacing recession expectations with signs of stagnation, a closely watched survey showed Monday.

The investor sentiment index improved to -8.0 in February from -17.5 in January, the behavioral research institute Sentix said. This was the highest reading since March 2022.

With the fourth consecutive rise, the sentiment indicator is gradually heading toward the zero line, the think tank said.

The strong 9.5 point rise signals that a recession is off the table. "Instead, the scenario of stagnation is gaining in contour," Sentix added. The currency bloc avoided an energy crisis and the rosy corporate news contributed to the turnaround from the recessionary path.

Assessment of the current situation as well as expectations logged another increase in February. At -10.0, the current situation index climbed from -19.3. The expectations index improved to -6.0 from -15.8.

The current situation index hit the highest level since June 2022 and the expectations measure climbed to a one-year high. Still both components are deep in red.

Germany is also set to avert recession and there are many indicators of stagnation, Sentix said. The investor confidence index surged to -6.8 in February from -16.5 in the previous month.

The current assessment as well as expectations moved in tandem, the survey showed. The current situation index registered -8.8 after rising marginally to -18.0 in January. The expectations index improved sharply to -4.8 from -15.0 a month ago.

Last month, the International Monetary Fund projected the growth in Eurozone to bottom out at 0.7 percent this year before improving to 1.6 percent in 2024. The lender forecast Germany to grow just 0.1 percent in 2023 and 1.4 percent next year.

Elsewhere, official data showed that Eurozone retail sales declined at the fastest pace in nearly two years in December as rising price pressures weighed on household spending.

Retail sales fell 2.7 percent on month, in contrast to the 1.2 percent increase in November. This was the worst decline since April 2021.