BRUSSELS (dpa-AFX) - Eurozone economic sentiment deteriorated more-than-expected to the lowest level in nearly three years in June, strengthening calls for further monetary easing, survey data from the European Commission showed Thursday.
The economic sentiment index dropped to 103.3 in June from 105.2 in May. This was the lowest since August 2016, when the reading was 103.2. The score was forecast to fall moderately to 104.7.
The fall in sentiment index was consistent with the view that GDP growth in the currency union slowed to 0.2 percent in the second quarter, Jack Allen-Reynolds, an economist at Capital Economics, said.
It is also likely to strengthen European Central Bank policymakers' resolve to loosen monetary policy in the coming months, the economist noted.
The weakness in overall sentiment was driven by lower confidence in industry and services and among consumers, while confidence improved in retail trade and, particularly, in construction.
The industrial sentiment index declined to -5.6 from -2.9 a month ago. The expected reading was -3.0.
The sharp drop was caused by managers' more pessimistic views on production expectations, the current level of overall order books and the stocks of finished products.
Similarly, the services confidence index came in at 11.0, down from 12.1 in May. Economists had forecast the score to rise to 12.4.
The decline reflected managers' more pessimistic views on the past business situation, past demand, as well as demand expectations.
At the same time, the consumer sentiment indicator slid to -7.2 from -6.5 in the previous month. The reading came in line with the flash estimate.
The decline indicates households' more negative views on their past and future financial situation, their expectations about the general economic situation and their intentions to make major purchases.
On the other hand, the confidence index in construction climbed to 7.7 from 4.1 in the previous month, thanks to a strong rebound in managers' employment expectations and a slight improvement in the appraisals of the level of order books.
On the back of managers' better assessments of the present and expected business situation, the retail trade confidence index improved to +0.1 from -0.9 in May.
Another report from EU showed that business sentiment weakened in June as managers' production expectations, as well as their views on overall and export order books and the level of stocks deteriorated.
The corresponding index slid to 0.17 from 0.30 in May. This was also below the forecast of 0.28.
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