Eurozone Investor Confidence Improves; Private Sector Downturn Slows

(RTTNews) - Euro area investor confidence strengthened for the fourth straight month to a ten-month high in February but the level remained weak due to the negative economic pull from Germany, survey data published by the behavioral research institute Sentix showed Monday. Elsewhere, the final Purchasing Managers' survey results showed that the Eurozone private sector contracted at the slowest pace since last July as southern economies boosted the momentum.

The Sentix investor confidence index advanced to -12.9 in February from -15.8 in January. The index hit the highest since April 2023. The reading was expected to advance to -15.0.

However, the think tank said the recovery process remains sluggish due to the precarious situation in Germany. The recovery can be classified as "moderate", said Sentix.

The current situation index for the currency bloc improved to an eight-month high of -20.0 in February from -22.5 in the previous month.

Likewise, the expectations indicator registered -5.5 compared to -8.8 in January. This was the highest level in two years.

The euro area is continuing to fight against recessionary tendencies in the economy.

"The expectation values would have to become clearly positive in order to give hope for a turnaround," Sentix added.

The survey observed that the German economy is stuck in recession and is struggling to emerge from it.

Germany's investor confidence index declined to -27.1 in February from -26.1 a month ago.

The current situation indicator posted -39.3 compared to -35.5 in the previous month. The expectations index rose to -14.0 from -16.3 in January.

The PMI survey showed that the S&P Global/HCOB composite output index for the euro area rose to a six-month high of 47.9 in January, in line with flash estimate, from 47.6 in December.

A softer contraction in factory output helped to offset a slightly quicker deterioration in services activity. The services Purchasing Managers' Index dropped to 48.4 in January from 48.8 in the previous month.

The reading matched the flash estimate and signaled the sixth successive month of falling services output.

"Contrary to the general view that southern European countries are the weak link of the currency union, these economies are presently performing relatively well," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

Germany's private sector remained in the contraction zone in January.

The HCOB composite output index dropped to a three-month low of 47.0 in January from 47.4 in the previous month. The flash reading was 47.1.

The decline resulted from a faster decline in services activity. On the other hand, manufacturing posted its slowest contraction in eight months.

The services PMI registered 47.7, down from 49.3 in December but above the flash score of 47.6. The contraction in the French economy sustained in January with the output falling for eighth straight month.

The composite output index slid to 44.6 from 44.8 in December. Nonetheless, the score was above the initial reading of 44.2.

At 45.4, the final services PMI was down from 45.7 in December. The flash score was 45.0.

Meanwhile, Italy's private sector re-entered the expansion zone and Spain's economy logged another expansion in January.

The Italian private sector expanded for the first time since last May, driven by a renewed expansion in the service sector. The composite output index advanced to 50.7 from 48.6 a month ago.

The services PMI hit 51.2 in January, up from 49.8 in December. The increase was the first in six months, owing to improved client interest and the recent influx of new customers, the survey showed. Spain's services economy helped to drive another increase in the private sector output in January. The HCOB composite PMI posted 51.5, up from 50.4 in the prior month.

At the same time, the services PMI climbed to 52.1 in January from 51.5 in December. The score suggested the strongest expansion since July 2023.