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Euro zone economic sentiment drops more than expected in February

[BRUSSELS] Euro zone economic sentiment deteriorated by far more than expected in February, pulled down by more pessimism in industry, the service and retail sector and among consumers and financial services, data from the European Commission showed on Friday.

The Commission said economic sentiment in the 19 countries sharing the euro fell to 103.8 in February from a slightly upwardly revised 105.1 in January. Economists polled by Reuters had expected a smaller decline to 104.4.

The Commission's business climate indicator, which points to the phase of the business cycle, also fell sharply to 0.07 from 0.29 in January. Economists had expected a slight decline to 0.28.

Sentiment in industry fell to -4.4 from -3.1, and declined to 10.6 from 11.5 in the services sector, which account for more than two thirds of the single currency area's GDP.

The consumers' confidence index also dropped to -8.8 from -6.3 in January, down from -5.7 in December. Sentiment in retail trade went also down to 1.6 from 2.7 in January.

The financial services sector reported a deep drop in confidence to 7.5 in February from 17.7 in January.

Manufacturers were the only sector showing more confidence with their general index slightly improving to -17.5 in February from -19.0 in January, although it remained firmly in negative territory.

However, manufacturers were less upbeat about the possibility of raising prices in the future, with the selling price expectations index down at -5.5 in February from -4.1 in January and -3.2 in December.

Consumers instead expected prices to grow more quickly in the next 12 months - their inflation expectations index increased to 3.7 in February after a sharp drop in January when it was at 2.3.


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