(Bloomberg) -- Euro-area economic confidence declined more than forecast in June, dropping to its lowest level since 2016 as deepening trade tensions and a more cautious outlook for the global economy weigh on business and consumer sentiment.
The European Commission’s gauge of sentiment fell to 103.3 points, after 105.2 points in May and below the median forecast of 104.8. That was primarily due to a sharp decline in confidence among industry executives, who saw the most significant decrease in about eight years. It’s the latest sign that the euro zone’s already-battered industrial sector has taken an additional hit from the looming threat of new U.S. tariffs and the failure of Washington and Beijing to reach a definitive trade agreement.
Managers in the industrial sector were more pessimistic on all fronts: their expectations for production, their level of order books and their stocks of finished products.
The figures will add to a growing sense that the economic outlook for the second half of the year isn’t improving as policymakers had hoped. European Central Bank President Mario Draghi has said he’s poised to act if the region’s economy doesn’t pick up. The confidence report from the European Commission showed sharply weaker figures in Germany and a decline in sentiment in Italy, France, the Netherlands and Spain.
Services confidence also fell but less quickly than in the industrial sector, highlighting its relative resilience. Managers in the services industry, though, said they were pessimistic about the outlook.
Consumers also had a more negative outlook including about the general economic situation. The sentiment figures for June appear to show that an unexpected uptick in May was most likely an outlier and that economic confidence is continuing a downward trend that started about a year ago.
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