Pandemic measures cast pall on euro zone investor morale

The euro sign is photographed in front of the former headquarters of the European Central Bank in Frankfurt, Germany, April 9, 2019. Picture is taken on slow shutter speed while the camera was moved. REUTERS/Kai Pfaffenbach/File Photo

BERLIN, Dec 6 (Reuters) – Investor morale in the euro zone in December fell to its lowest level since April as renewed restrictions to contain a fourth wave of coronavirus infections clouded the growth outlook, a survey showed on Monday.

Sentix’s index for the euro zone fell to 13.5 from 18.3 the previous month. Analysts on average had expected a December reading of 15.9, according to a Reuters poll.

Tightened lockdown measures, especially in Germany and Austria, considerably dampened the assessment of current conditions in the euro zone, said Sentix Managing Director Manfred Huebner.

“A slowdown and even a recession no longer seem to be ruled out now. These lockdowns hit the economy harder than before,” Huebner said.

A current conditions index fell for the third month in a row to 13.3 from 23.5 in November, dropping to its lowest since May. Still, an expectations index rose to 13.8 from 13.3 in the previous month.

Sentix surveyed 1,164 investors on Dec. 2-4.

The Sentix survey followed economic data from Germany, Europe’s largest economy, where weaker demand from abroad drove a much bigger-than-expected drop in industrial orders due to lockdowns in Asia and supply chain problems at home. read more

A Sentix sub-index for investor morale in Germany fell for the fifth month in a row to reach its lowest level since March.

“The tightening of the coronavirus measures and, in particular, the exclusion of customers from the retail sector through the so-called 2G measures put a considerable strain on the situation in Germany,” Huebner said.

Household spending was already the sole driver of growth in Germany in the third quarter as factories struggled with a pandemic-related scarcity of microchips and other electronic components.

The jump in coronavirus infections and the renewed curbs are now threatening to knock away Germany’s last pillar of growth, setting its economy on track for stagnation at best in the final quarter of this year.

Reporting by Michael Nienaber, Editing by Zuzanna Szymanska; editing by Jason Neely

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