Economic confidence in Europe declined once again in March, with a notable slump in the services and retail sectors, deepening concerns over the region’s economic recovery.
The euro area’s economic sentiment index fell to 95.2, marking a significant dip that raised doubts about the region’s ability to overcome stagnation.
After a brief period of stability, sentiment across the European economy weakened in March, driven by fading optimism in key sectors like services and retail. This decline pushed confidence further below historical levels, signaling growing challenges to economic recovery.
According to a report from the European Commission, the Economic Sentiment Indicator for March dropped by 0.9 points in the European Union to 96.0, and by 1.1 points in the euro area to 95.2. This result was well below the long-term average of 100 and missed expectations of a rebound to 97.
This marks the second consecutive monthly decline and highlights mounting concerns over Europe’s short-term economic prospects. The downturn in sentiment was largely driven by falling confidence in services, retail trade, and consumer outlook.
Services, which play a crucial role in the eurozone economy, saw a sharp decline in confidence, dropping from 5.1 to 2.4 points—the largest monthly drop in four months. The reading fell short of expectations for a rise to 6.7, as managers reported a deterioration in their business situation, past demand, and future demand expectations, signaling potential weakness in a traditionally resilient sector.
Retail confidence also declined by 1.8 points, weighed down by pessimism regarding expectations, current conditions, and stock levels. While the retail sector had remained relatively stable in previous months, March’s significant drop suggests increasing caution among both businesses and consumers.
Consumer sentiment continued its downward trend, with the index falling by 0.9 to -14.5, in line with estimates. Households across the bloc expressed greater pessimism about their country’s economic outlook and their personal financial prospects.
However, there was a slight improvement in intentions to make major purchases, indicating some resilience in consumer spending, possibly driven by easing inflation and expectations of higher wages.
