Eurozone economic confidence weakened more-than-expected in March mainly due to plummeting consumer confidence, monthly survey results from the European Commission showed on Wednesday.
The economic sentiment index fell to 108.5 in March from 113.9 a month ago. The reading was seen at 109.0.
The decline in the ESI in March was mostly due to plummeting consumer confidence, accompanied by marked losses in retail trade and industry confidence.
The consumer confidence declined sharply to -18.7, in line with the flash estimate, from -8.8 in February. The decrease was largely caused by the collapse in households’ expectations about the general economic situation and own future financial situation.
Reflecting the sharpest drop in managers’ production expectations since the COVID-19 pandemic, the industrial confidence dropped to a one-year low of 10.4 from 14.1 in February. However, the score was above the economists’ forecast of 9.0.
After rising for two straight months, the services sentiment index came in at 14.4, up from 12.9 in the previous month and better than the expected level of 10.0.
Meanwhile, the sentiment indicator for retailers slid to 0.2 from 5.5 in February. The marked downturn in confidence resulted from the slump in managers’ assessments of their expected business situation.
Construction confidence remained broadly unchanged, down only 0.1, as managers’ improved appraisal of the level of order books was offset by more muted employment expectations.
After reaching record high levels in February, business managers’ Employment Expectations Indicator eased 0.9 points to 115.5 in March.
Further, the survey showed that selling price expectations for the next three months rose to unprecedented levels in all surveyed business sectors. After four months of a broadly horizontal movement, consumers’ price expectations for the next twelve months surged to an all-time high.