Eurozone Sentix Investor Confidence dropped from 18.3 to 13.5 in December, missed expectation of 15.9. That’s also the lowest level since April. Current Situation Index dropped for the third straight month from 23.5 to 13.3, lowest since May. Expectation Index, on the other hand, improved slightly from 13.3 to 13.8.
Sentix said that hopes of an end to the economic slowdown “have been abruptly dampened” by the latest Sentix data. Lockdown measures in Germany and Austria are “putting a considerable damper on current economic activity”.
It added: “Our basic scenario of a ‘mid-cycle slowdown’, i.e. a consolidation in the middle of a cycle, does not have to be abandoned yet. But the risks are increasing! It is also interesting that our thematic analysis reveals an increasingly negative influence of central bank policy. While a continued expansionary monetary policy is likely to fuel inflation in particular, a shift to a restrictive course would obviously be burdened by liquidity constraints. The ECB thus seems to be definitively ‘behind the curve’. The risks for markets and the economy are increasing.
