The deterioration in eurozone sentiment resulted from a worsening in all business sectors except retail trade, according to research from the company.
“A slowing Chinese economy, the immigration wave, and continued tensions with Russia will likely weigh on the confidence of consumers and businesses in the euro area in coming months,” said Tomas Holinka, economist at Moody’s Analytics.
The industrial confidence, service providers’, consumer and construction subindexes all decreased, while the retail trade sub-index remained unchanged at 2.9 in January. The eurozone’s economic sentiment indicator was broadly in line with other consumer and business confidence surveys, the data showed.
“Still, we expect confidence in the eurozone to pick up in the first quarter of this year, with a more robust recovery gaining traction,” said Holinka.
Moody’s Analytics said the rate of expansion across the single currency area picked up to 1.5% for all of 2015 and should maintain this pace in 2016. Improved purchasing power of households, due in part to reduced energy prices is supporting household consumption, while a decrease in energy input prices is boosting investment by firms.
The European Central Bank expanded its scope of action in December to fight deflation pressures, when it announced the extension of its quantitative easing program until at least March 2017 and kept the pace of monthly asset purchases steady at €60m, Holinka noted.
