Eurozone economic sentiment fell to a four-month low in November as confidence in the service sector took a hit, the European Commission said on Tuesday. Evidence of waning morale will reinforce expectations that eurozone growth is losing momentum in the fourth quarter of this year, particularly as there are signs that households are scaling back plans for major purchases in the next 12 months.
Nevertheless, there was an unexpected increase in consumer confidence as households gave a more positive assessment of future savings and trends in prices, both for the past year and the coming 12 months.
The economic sentiment index fell to 100.8, in line with economists' consensus forecasts, from 101.3 in October as the services component sank to 10, its lowest since June, from 12.
The downturn in the service sector came as firms turned more gloomy in their assessment of the current business situation and about the trends of demand in recent months.
Still, they were more upbeat than last month about the prospects for demand in the months ahead and in their expected outlook for employment trends.
The decline in service sector morale more than offset a rise in the consumer sentiment index to minus 13 from minus 14. Industrial confidence remained at minus 3 for the third month in a row.
Economists polled by Reuters had expected readings of minus 14 and minus 3 for consumer and industrial confidence respectively.
Households turned more pessimistic about the general economic situation over the next 12 months and the past year.
They were also more downbeat about their own financial situation over the past 12 months and the component measuring their plans to make major purchases in the next year fell.