Bert Colijn, senior economist at ING, points out that the most important takeaway from the Economic Sentiment Indicator of Eurozone which is down from 103.1 to 101.7 in September is that the spillover from weak manufacturing to services remains muted, which is at odds with the message from the PMI earlier this week.
Key Quotes
“This signals that the problem remains somewhat isolated to manufacturing for now, although the service sector will ultimately feel the repercussions if this lasts much longer.”
“Industrial sentiment was dismal in September, dropping from -5.8 to -8.8. This was because of a deterioration on all fronts: recent production, current order books, and production expectations all declined. This provides a clear indication that an end to the industrial slump is not yet in sight.”
“Service sector sentiment improved from 9.2 to 9.5 in September though. This was a small recovery from a larger August drop but it indicates some stabilisation in the sector, which is needed for continued GDP growth given the contraction in manufacturing.”
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