Eurozone Economy Braces Itself For Prolonged Sluggishness

Summary

• Businesses report a slight tick-up in selling price expectations, but hard data still looks benign.
• Decline in the Economic Sentiment Indicator in October came as no surprise after the PMI had already dropped further into contraction territory.
• ESI does not show any marked deterioration though. Industry saw sentiment weaken slightly, while services sentiment ticked up a bit.
• Employment demand from manufacturing is outright negative, and in services, it has now dropped below the historic average.
• The inflation picture showed two small increases in selling price expectations for both goods and services.

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By Bert Colijn

Economic sentiment dropped in October as the first countries reported somewhat better-than-expected GDP growth in the third quarter, making a technical recession in the second half of the year unlikely - but a decline in