Euro-area consumer confidence unexpectedly declined in September, adding to signs the single-currency bloc is sliding into a recession.
An index of household sentiment in the 17-nation euro area dropped to minus 25.9, the lowest since May 2009, from minus 24.6 in August, the European Commission in Brussels said in an initial estimate today. Economists had forecast an improvement to minus 24, the median of 32 estimates in a Bloomberg survey showed.
“The euro region’s fundamentals remain weak,” Thomas Costerg, an economist at Standard Chartered Bank in London, said before today’s report was released. “Activity is impacted by austerity measures, deleveraging and fragile confidence,” and “a further rate cut by the ECB in the coming months looks likely,” he said.
The euro area’s economy is sliding into a recession as fallout from the fiscal crisis damps consumer spending and corporate investment. The median estimate in a Bloomberg News survey of 21 economists is for a 0.2 percent economic contraction in the third quarter after a similar decline in the previous three months. Retail sales dropped 0.2 percent in July from the previous month.
European Central Bank policy makers on Sept. 6 agreed on details of an unlimited bond-purchase program aimed at regaining control of interest rates in countries such as Spain and Italy and preventing a possible breakup of the common currency.
The central bank also forecast a deeper economic contraction for 2012 than it did three months ago, predicting euro-area gross domestic product will drop 0.4 percent this year instead of 0.1 percent.
Euro-area manufacturing production contracted for a 14th straight month in September, while services output shrank for an eighth month, according to London-based Markit Economics.