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Bloomberg
Euro-area economic confidence extended its worst losing streak in a decade at the start of 2019 as member states faced a variety of domestic frailties and trade uncertainties.
The European Commission’s economic sentiment index dropped more than economists forecast in January, reaching the lowest in more than two years. Pessimism spread in industry, services and retail trade, while the mood among consumers improved slightly.
The euro area has turned into a weak spot of the world economy. The European Central Bank acknowledged risks have “moved to the downside’’ and when the IMF cut its global growth forecast this month, Germany and Italy had the biggest downward revisions.
France, the euro area’s second largest economy, earlier
reported a disappointing domestic performance in the fourth quarter of 2018. A surge in exports boosted economic growth to 0.3 percent, but household expenditure — the traditional engine of the French economy — stagnated. A separate report showed a huge plunge in December alone, when retailers were dogged by violent Yellow-Vest protests.
The euro was little changed as of 11:10 a.m. Frankfurt time, as was the Stoxx Europe 600 Index. The Italian economy probably slipped into recession at the end of 2018 — a destiny Germany only narrowly avoided after eking out modest growth in the fourth quarter. Spain has held up well so far, with growth forecast to exceed 2 percent this year. Eurostat will report fourth-quarter GDP figures for the euro area.
In a sign that weaker global growth has started to bite, euro-area industry orders — particularly those from abroad — slumped at the start of the year.
Osram Licht, a German manufacturer of lights, has said ongoing trade conflicts, weak growth in China and general political uncertainties hurt first-quarter revenue.
In France, retailers including Fnac Darty, Casino and Carrefour have cited unrest and store closures related to the Yellow Vests for their disappointing performance.
ITALY MANUFACTURING CONFIDENCE FALLS
Italian manufacturing confidence fell for a fourth straight month amid sharply reduced economic growth expectations.
The business gauge dropped to 102.1 in January, the lowest since September 2016, from a revised 103.4 the month before, statistics agency Istat said on Wednesday in Rome. This month’s reading was less than economist expectations of 103.0. Consumer confidence unexpectedly rose.
Istat is scheduled to release gross domestic product data for the fourth quarter on Thursday, with many economists expecting them to show Italy dropped into a recession at the end
of last year.
Economic sentiment fell to 99.2 in January, pointing to a possible drop in economic performance. Drop in business confidence indicators will hinder government’s push for more growth this year. Widely diverging views on 2019 growth may be leading to confusion. The populist government says it expects 1 percent, while Premier Giuseppe Conte says he is “confident†it could reach the originally targeted
1.5 percent. The Bank of Italy and International Monetary Fund both forecast 0.6 percent this year.
Populist leaders are already gearing up for European Parliament elections in May, adopting a hardline stance on key issues to boost their voter appeal and divert attention from the economy. Italy has suffered from years of near-stagnation and the European Commission
says it expects the country to have the slowest growth rate in the 19-nation euro region this year and next.