Eurozone investor confidence improved in August but less than expected suggesting that the economy is undergoing a downturn, results of a closely-watched survey showed Monday.
The investor confidence index rose to -25.2 in August from -26.4 in July. Nonetheless, the reading was below economists’ forecast of -24.7.
Despite the increase, a recession in the currency bloc is still very likely, Sentix said. Both the situation index and the expectations indicator continue to paint a gloomy picture of the economic environment.
It is not surprising that neither weak consumer confidence, nor the inflation front, nor energy prices are providing any lasting positive impulses, the think tank said.
Further, consumer confidence in particular is set to be the greatest economic burden. Consumers face higher energy costs. Companies too experience increased input cost, which they are forced to pass on to consumers.
The already emerging consumer restraint is thus likely to continue and presumably even intensify, Sentix noted. The stress factors of inflation and central bank policy remain, so that with a view to autumn the economic omens remain negative.
The current situation index for the euro area gained slightly to -16.3 in August from -16.5 in the previous month. At the same time, the expectations indicator advanced to -33.8 from -35.8.
The survey suggested that the German economy is heading for a recession. The investor sentiment index fell to -24.4 in August, the lowest since May 2020, from -24.2 in the previous month.
At -14.8, the current situation indicator weakened to the lowest since February 2021, from -13.0 in July. Meanwhile, the expectations index rose to -33.5 from -34.8.
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