After the PMI reflected a surprisingly upbeat reading of the eurozone economy last week, the European Commission’s economic sentiment indicator adds a bit of nuance to the picture. A tick down from 95.2 to 94.9 in the headline index shows that expectations of a jump in growth would be overdrawn. The decline was mainly due to lower confidence among consumers, but services and construction sentiment indicators were also slightly down.
The improvement in manufacturing sentiment was smaller than for the PMI, but even so, industry did become more upbeat on orders, for example. And production improved by a lot according to the survey, although production expectations for the months ahead ticked down again. Still, that is in line with stronger third-quarter manufacturing output.
For services, demand weakened again and is now below the already soft second-quarter average. That means that so far, limited growth can be expected from the service sector in the third quarter, according to the survey. This will surely keep growth muted given the size of the sector.