Investor’s confidence in the eurozone dropped more than the forecast in October based on the survey on Monday, amid worries on Italy’s fiscal policies and stricter car compliance, especially emission rules giving a big impact.
The Sentix index for the eurozone dropped to 11.4 from 12 points in September while the Reuters forecast suggests a drop to 11.7. Meanwhile, the sub-index measuring expectation grew slightly to -8.3 from -8.8 as it drops down to 33 from 35, reaching its lowest since April 2017.
The automobile sector in Germany, as well as the future fiscal policy of the Italian government, had a big impact on the slight decline of the index, according to the managing director of Sentix, Manfred Huebner.
Italy was also part of the concern by investors as the European Commission intends to bring the planned deficit lower, with the EU rules in mind.
Another index measuring investor morales in Germany showed an increase in spite of increasing pressure in the large automotive sector to remunerate for older diesel cars. Stability concern on Chancellor Angela Merkel’s government with the coalition to their allies and center-left social democrats also has had an influence on this besides contentious argument over immigration and spy-related scandal.
Nevertheless, the German economic data remains steadfast despite the worrisome discussion on the car industry and repute of the governing coalition stability, Huebner added.
The economy may have been “cooling down” but a recession is still not on the table.