The EU Commission's measure of economic sentiment (ESI) continued to edge down in September. At 110.9, the index was 0.7 points short of its unrevised August reading and at its lowest level since June last year. The gauge has fallen every month so far in 2018.
The latest headline drop was attributable to worsening confidence in industry (4.7 after 5.6) and households (minus 2.9 after minus 1.9). However, elsewhere, morale was firmer in services (14.6 after 14.4), retail (2.7 after 1.9) and construction (8.3 after 6.4).
Nationally, ESIs were down in all the larger four Eurozone states. France was off a sizeable 1.7 points at 106.3, Germany 0.2 points at 112.5, Italy 0.2 points at 108.0 and Spain 1.5 points at 105.5. All recorded their weakest reading of the year to date.
Meantime, inflation developments were mixed. Manufacturers' selling price expectations (11.6 after 10.5) saw their highest level in six months and consumer inflation expectations (20.1 after 18.2) rose for a third straight month and reached their highest point since January 2013. However, services (8.4 after 9.3) posted their first decline since March.
The ECB should be quite comfortable with the generally firmer outlook for prices but must be at least a little concerned by the ongoing slide in economic sentiment. Historically, the current level is still high but any further declines must raise some question marks over Eurozone economic prospects which, in turn, could weaken the future inflation profile.