The European Commission announced today that its July economic sentiment indicator for the 17-nation eurozone fell to 87.9 from 89.9 in June. Economists surveyed by Dow Jones Newswires had forecast a reading of 88.9.
The consumer confidence index fell to -21.5 in July from -19.8, while the industry sentiment index dropped to -15.0 from -12.8, the commission said. And the services sentiment dropped to -8.5 from -7.4, while the retail index fell to -15.0 from -14.4. The construction index declined to -28.4 from -28.1.
Among the European Union’s larger economies, sharp declines were noted in Germany, France and Spain. Increases in confidence were recorded in the United Kingdom, Italy and the Netherlands.
The continued decline in confidence suggests that doubts over the future financial stability of Greece and Spain are affecting the entire region. The prospect of a lengthy contraction in the region could prompt the European Central Bank into further action to support growth, likely in the form of another cut in its key interest rate.