2024.01.0812:07:00UTC+00Eurozone Economic Sentiment Improves In December

Euro area economic confidence strengthened notably in December amid a widespread improvement across sectors, monthly survey results from the European Commission showed Monday.

The economic sentiment index rose to 96.4 in December from 94.0 in November. A similar higher score was last posted in May 2023.

All components of economic confidence improved from November. Industrial sentiment strengthened after sliding in November. The corresponding index posted -9.2, up from -9.5 in the previous month.

The services sentiment index improved to an eight-month high of 8.4 from 5.5 in the prior month. At the same time, the consumer confidence index registered -15.0 compared to -16.9 in November. The flash reading was -15.1.

At -5.7, the retail trade confidence rose from -7.1 in November. Likewise, the index for construction stood at -3.6, up from -4.4 in the prior month.

The survey was conducted between December 1 and 20.

The employment expectations index posted a marginal increase in December, rising to 102.8 from 102.7.

The European Commission today introduced the new Labour Hoarding Indicator. The index measures the percentage of managers expecting their firm's output to decrease, but employment to remain stable or increase.

In December, the LHI for EU stayed virtually unchanged at 10.5 percent, slightly above its long-term average of 9.7 percent.

Official data today showed that retail sales declined in November due to the weakness in food and non-food turnover. Sales registered a monthly fall of 0.3 percent, reversing the 0.4 percent rise in October.

Within total sales, food, drinks and tobacco sales slid 0.1 percent and sales of non-food products decreased 0.4 percent. Mail orders and internet sales posted a notable 1.2 percent decrease.

On the other hand, sale of automotive fuel in specialised stores increased by 1.4 percent.

On a yearly basis, the decline in retail trade deepened to 1.1 percent from 0.8 percent in October. Economists had forecast sales to log a 1.5 percent decrease.

The data published today are consistent with the assessment that the currency bloc is more likely to have contracted than expanded in the fourth quarter of 2023, Capital Economics' economist Jack Allen-Reynolds said.

They also suggest that while underlying price pressures have fallen a long way, the European Central Bank's job is not done yet, the economist added.

Elsewhere, survey data from the behavioral research institute Sentix showed that investor confidence rose for the third straight month in January.

The investor sentiment index advanced to -15.8 from -16.8 in the previous month. This was the highest score since May 2023.

"Even though the situation and expectations values have each risen by 1 point, this does not yet ensure a turnaround," Sentix said.

The current situation index posted -22.5 compared to -23.5 in December. Likewise, the expectations indicator climbed to -8.8 from -9.8.

Contrary to the Eurozone trend, the overall score fell by 0.6 points in Germany. The German economy is still in recession and therefore in crisis, said Sentix.