Businesses and consumer confidence in the eurozone rose faster than expected in september, although it was the smallest improvement for five months, adding to signs that the recovery in the blocs pandemic-stricken economy is losing momentum.
The european commissions monthly survey found waning pessimism in industry, retail trade, construction and, in particular, services, it said on tuesday.
Its overall eurozone economic sentiment indicator rose 3.6 points to 91.1, its highest level since the pandemic struck in march. but it remained well below pre-coronavirus levels.
Much of this months gain was driven by backward looking parts of the survey, while activity expectations for the next three months softened slightly in services and retailing and held about steady in manufacturing, said oliver rakau, economist at oxford economics.
Across the biggest eurozone economies, the commission said sentiment had rebounded fastest in germany, which has recovered 80 per cent of the ground lost during the coronavirus lockdown. in contrast, spain has regained only 55 per cent of its lost ground.
The pandemic and subsequent lockdowns led to a record postwar recession in the first half of this year, but the eurozone economy has rebounded strongly in the third quarter. however recent data indicate that the recovery is losing momentum, especially as rising coronavirus infections have prompted governments to reimpose some restrictions.
Other data also published on tuesday pointed to fresh economic weakness in the domestically-focused services sector. spanish retail sales increased 1.8 per cent in august from the previous month, but they were still down 2.4 per cent compared with the same period last year.
Spain also remains stuck in deflation; consumer prices fell 0.6 per cent in september,a similardecline tothe previous month.inflation also turned negativein germany for the first month in more than five years consumerprices declined 0.2 per cent between august and september.
Services weakness and slower wage growth suggest that current core [inflation] weakness will likely persist, at least until uncertainty moderates about a second wave of covid, said markus gtschow, economist at morgan stanley.
Separate data showed that french household confidence stagnated in september at a level well below the long-term average. fears about unemployment rose slightly, according to the latest survey by the national statistics office.
The commission said services companies demand expectations had waned for the second month in a row. it also reported a deterioration in retail trade managers expectations about their business climate over the next three months.
The commission said its employment expectations indicator rose for a fifth consecutive month, up 2.3 points to 91.8.
Consumer confidence was lifted by an improved outlook on the general economic situation and a slight improvement in optimism about their own financial conditions over the next 12 months.
Consumer intentions to make major purchases remained broadly stable and markedly below their pre-crisis level, the commission said.