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How Eurozone ZEW Economic Sentiment Index Looks in December

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Eurozone ZEW Economic Sentiment Index

According to a report by the Centre for European Economic Research (or ZEW), the Eurozone ZEW Economic Sentiment Index fell to 29.0 so far in December compared to 30.9 in November 2017. It’s missing the market expectation of 34.8.

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Reason for the weakness

The weakness in this index is signaling that economists are not very optimistic about economic activity in the upcoming six months. The rising uncertainty about the Brexit (UKX-INDEX) negotiations and the government of Germany (DAX-INDEX) seems to be hampering the Eurozone’s short-term economic outlook.

On the other hand, we’ve seen that major economic indicators for the Eurozone (N100-INDEX) (VGK) have shown improved figures in the past months. Improving economic health is helping the central bank maintain a status quo in its ongoing rate cut decisions and reductions in bonds. The ECB (European Central Bank) already hinted that there won’t be any room for further rate cuts. That could indicate that it may soon follow the path of the Fed.

However, rising uncertainty about reforms in the Eurozone and Brexit negotiations are impacting economic sentiment. It may affect consumer activity in the near future. The iShares MSCI EMU (EZU), which tracks the performance of the Eurozone, has fallen marginally so far in December 2017.

In the next part of this series, we’ll take a look at China’s retail sales in November 2017.

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