Economic sentiment in the 16 countries that use the euro worsened in February, the European Commission said Thursday, in a further sign that the recovery from recession has lost its momentum.
In its monthly survey, the Commission said that its main economic sentiment indicator fell by 0.1 point to 95.9 in February, partly because consumer confidence deteriorated.
The decline, the first after ten consecutive monthly increases, was not expected by markets — the consensus was for a modest increase to 96.6.
"The rebound appears to have lost its momentum," the Commission said.
However, it sought to ease the disappointment by noting that the indicator is not far off its long-term average.
Among the euro members, France saw the biggest fall in sentiment, followed by Italy, while the most pronounced advances were seen in Spain, Germany and the Netherlands.
The Commission said there was no clear pattern across sectors, with sentiment up in industry and services but lower with among consumers. The consumer confidence indicator fell by 1 point to -17, in line with market expectations.
"Consumers' perception of the general economic outlook and increasing unemployment fears, especially in Spain and in Italy, contributed to the overall deterioration," the Commission said.
Analysts think that the pace of the recovery in the euro zone will depend heavily on whether consumers ratchet up their spending. So far, the modest economic growth — the euro zone economy grew by an anemic 0.1 percent in the last three months of 2009 — has been largely due to a pickup in global trade volumes, which has boosted exports.
For the wider 27-country EU, which includes non-euro members such as Britain and Sweden, the Commission said its economic sentiment indicator rose by 0.2 points to 97.4, helped by a big increase in Poland.
In a separate survey, the Commission said its business climate indicator — a gauge of business conditions — rose for the eleventh month in a row in the euro zone to minus 0.98 in February from January's minus 1.13 partly as a result of improving order books.
However, the Commission said the relatively low level of the indicator suggests that year-on-year industrial production was still negative.
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