2018.02.2022:43:00UTC+00Eurozone Consumer Confidence Drops in February

Consumer morale in the eurozone dropped in February from a 17-year peak in January, according to a flash estimate for the European Commission.

The headline sentiment index fell to 0.1 in February, well short of the consensus estimate of a 1.0 reading and the first decline in the measure in seven months.

That followed a bumper bout of optimism in January, when the index showed household confidence peaked at 1.4 — even higher than the original 1.3 estimate for the month.

In the wider European Union, confidence also declined - to -0.3 points from 0.4 points in January.

Uncertainty about possible eurozone reforms and Italian elections and difficulties forming a German government have so far taken a backseat to improved economic factors with unemployment in the euro zone at nine-year lows.

Nevertheless, confidence remains comfortably ahead of the long-run average of -12, and prospects for household spending growth remain “bright”, according to economist Stephen Brown of Capital Economics.

Annual household spending growth could increase as high as three percent based on the confidence data, Brown said, from around 1.6 percent at the end of last year. While the acceleration in spending may not be quite that good — “the index has overstated growth in recent quarters” — the omens are not bad either, he suggests.