Sentiment in the eurozone fell for a second straight month to its lowest level in more than a year in September, suggesting the single currency bloc will fall back into recession, a survey by Sentix showed on Monday.
Sentix research group’s index tracking morale among investors in the eurozone dropped to -9.8 in September, its weakest reading since July 2013, from 2.7 in August. That undershot by far the consensus forecast in a Reuters poll for a reading of 2.0.
“That’s remarkable because ever since President (Mario) Draghi took office, the ECB has always managed to boost investors’ economic expectations with a variety of measures. This doesn’t seem to be working anymore,” Sentix said in a statement.
“The indicator points to another recession in the eurozone,” it added.
The euro zone economy unexpectedly stalled in the second quarter of the year, dragged down by shrinking growth in Germany and stagnant France.
Sentix’s survey of 906 investors was conducted between Sept. 4 and 6. On Sept. 4 the European Central Bank cut interest rates to a fresh record low and launched a new scheme to pump money into the flagging euro zone economy, leaving open the option of more to come.
A sub-index tracking investors’ perception of the euro zone situation experienced its steepest fall since the Sentix index was first compiled in 2003. Sentix said that was largely due to the Ukraine crisis and economic sanctions.
A sub-index of expectations for the eurozone’s economy slid to its lowest level since November 2012.
An index tracking Germany dived to 11.1 from 17.9 and Sentix warned Europe’s largest economy would particularly suffer from the Ukraine crisis and resulting sanctions in the coming months. [Reuters]