Euro notes and coins are arranged for a photograph in London, U.K. (Photographer: Chris Ratcliffe/Bloomberg)

Euro-Area Economic Sentiment Extends Decline for Eighth Month

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Economic confidence in the euro area declined less than economists expected thanks to a solid service sector, suggesting the trade war-induced slide in sentiment over the past year may be bottoming out.

The European Commission’s index -- which assesses the mood of households and businesses -- dropped to 106.1 in February from a revised 106.3 the month before. That’s the eighth consecutive monthly drop, though the pace slowed after sharp declines around the turn of the year.

Euro-Area Economic Sentiment Extends Decline for Eighth Month

The 19-country region has suffered an almost non-stop barrage of downbeat data suggesting the economy is losing pace, and European Central Bank President Mario Draghi noted last month that risks have moved to the downside due to factors such as rising protectionism, Brexit and softness in China.

Euro AreaActual Prior
Economic Sentiment106.1106.3
Industry-0.40.6
Services12.111.0
Consumer-7.4-7.9
Business Climate 0.690.69

The decline in euro-area confidence this month was led by industry, echoing Purchasing Managers’ Indexes that have shown a slump in manufacturing in Germany and elsewhere. According to Goldman Sachs, while “some green shoots” are emerging globally, Europe is the weakest major region.

Yet Ireland’s central bank chief Philip Lane, who’s on track to replace ECB chief economist Peter Praet, said he doesn’t see Europe in a “super fragile situation.” Officials are preparing to discussing whether to respond to the slowdown with new long-term loans for banks. An announcement may come on March 7.

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