Eurozone Sentiment Falters On Debt Concerns

Consumers, service providers, and retailers in the 17 countries that share the euro did not see a rosier outlook like manufacturers did at the beginning of 2011 as the region’s debt woes continue to weigh on confidence, according toBloomberg. On Thursday, theEuropean Commissionreported that its overall sentiment indicator for the eurozone dropped just slightly to 106.5 in January, marking the first decline since May and surprising economists expecting a small gain. The index was just below the three-year high of 106.6 recorded the month before.

Confidence among manufacturers was seen higher in January, rising from 4.9 to 6.0 as exports drove increasing orders. However, services confidence dropped 0.4 points to 9.2 to open the year, and sentiment among builders inched up to negative 26. The data showed the consumers in the eurozone were less confident about the economic outlook as sovereign debt woes continue to cloud the future of the monetary union, with consumer confidence dropping slightly to negative 11.2. According toThe Wall Street Journal, an expectation for sharp price inflation in the coming months was also weighing on consumers, which could increase pressure for theEuropean Central Bankto react to the first above-target inflation in two years.

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