Eurozone Economic Confidence Falls At Record Pace Amid Covid-19

Eurozone economic confidence deteriorated at the fastest pace on record in April amid the coronavirus, or Covid-19, pandemic, survey results from the European Commission showed Wednesday.

The economic confidence index fell to 67.0 in April from 94.2 in March. This was the strongest monthly decline since 1985, and the reading reached near the lowest levels seen during the Great Recession in March 2009.

Among sectors, the crash was particularly marked in services and retail trade.

The industrial sentiment index plunged to -30.4 from -11.2 a month ago. The steepest monthly fall on record resulted first and foremost from managers’ crashing production expectations, the survey showed.

The services confidence index slid to a record -35.0 from -2.3 largely due to record-breaking deterioration in expected demand and in the assessment of the past business situation and past demand.

Likewise, the retail trade confidence fell sharply to -28.3 from -8.6 as there was exceptionally strong deterioration in retailers’ business expectations.

The consumer sentiment indicator came in at -22.7, in line with the flash estimate, versus -11.6 in the previous month. The stark decline was fueled by households’ tumbling expectations concerning the general economic situation and also their own financial situation.

The construction sentiment indicator declined to -12.8 from +2.3 a month ago. The slump reflected managers’ marked corrections to their employment expectations and assessments of the level of order books.

At -1.81, the business climate index hit the lowest level since December 2009.

The employment expectations indicator plummeted 30.1 points to 63.7 in April, the lowest level on record.

Bert Colijn, an ING economist, said the biggest concern indicated by the survey is the rapid decline in employment expectations for both industry and services.

Prospects for the coming months are dismal despite announcements of cautious lockdown loosening, the economist added.

Elsewhere, data from the European Central Bank suggested that monetary conditions have loosened significantly. The monetary aggregate M3 expanded at a pace of 7.5 percent annually in March, following a 5.5 percent rise in February.

Annual growth in credit to private sector improved to 4.2 percent from 3.4 percent a month ago.

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