Eurozone sentiment unexpectedly softens

Economic sentiment across the Eurozone unexpectedly softened in June, a closely-watched survey showed on Thursday.

According to the European Commission, the latest Economic Sentiment Indicator (ESI) was largely unchanged in June, dipping 0.2 points in both the Eurozone and wider European Union, to 95.9 and 96.4 respectively.

Analysts had pencilled in a small rise for the Eurozone ESI.

Only consumer confidence edged higher, by 0.3 points, although it remains at a historically low level of -14. The most pronounced fall was in retail trade, down 1 point to 7.8, the lowest reading for more than three years.

The EC noted: "In the EU, the sideward trend of the ESI reflected broadly stable confidence in industry, construction and among consumers, while confidence in services and retail trade dipped somewhat."

Among individual member states, the ESI eased 0.2 points in Germany, the bloc’s biggest economy.

The Eurozone Employment Expectations Indictor also eased to below its long-term average, falling for the third consecutive month, down 1.6 points to 99.7.

Rory Fennessy, senior economist at Oxford Economics, said: "The June ESI corroborates the other high-frequency survey data in suggesting that the eurozone’s economic recovery will be bumpy.

"We think GDP will rise in every quarter of 2024, but there are downside risks to growth if leading indicators fail to post a sustained recovery over the coming months."

Data was collected between 1 and 20 June.

The ESI is a composite indicator containing judgements and attitudes of business across industry, construction, retail trade and services as well as consumers.

The EEI is a weighted average for the employment expectations in the four business sectors.