Bert Colijn, senior economist at ING, notes that the Eurozone’s Economic Sentiment Indicator increased to 101.5 from 101.2 in December as divergence between manufacturing and services increases.
“The increase in services confidence was broad-based as both the assessment of recent demand and expectations for the months ahead improved significantly. Interestingly, the optimism of the service sector – mostly dependent on domestic demand – was not shared by consumers, as consumer confidence declined from -7.2 to -8.1.”
“Industrial confidence declined from -9.1 to -9.3, as the divergence between industry and services increased again. Order books and the assessment of recent production decreased again, indicating that the year ended with industry in recession. As expectations for the months ahead crept up, some return of industrial confidence seems to be on the cards, perhaps fueled by US-China trade developments and the passing of the US car tariff deadline without implementation. This warrants some cautious optimism about the state of Eurozone industry at the start of 2020, although weakness is far from over.”