Eurozone Survey Indicates Stagnant Economy and Persistent Inflation Pressures

Investing.com -- According to survey results from Capital Economics, the Economic Confidence (EC) survey indicates stagnation in the Eurozone's GDP in the fourth quarter, along with persistent inflationary pressures. The findings of the survey are consistent with previous indicators, including the Purchasing Managers' Index (PMI), which suggests no significant change in the last quarter of the year.

The Economic Sentiment Indicator (ESI) of the survey fell from a revised 95.6 in November to 93.7 in December. This decline was sharper than the consensus and our own predictions of 95.6 and 95.3, respectively. This drop aligns with the stagnation of GDP in the fourth quarter.

The survey also indicates a loosening labor market, as the employment expectations index decreased from 98.9 to 97.3. This decline is consistent with employment growth falling just above zero from a quarterly increase of 0.2% in the third quarter.

According to survey data, inflationary pressures continue to persist. Sales price expectations among firms in the industrial and construction sectors have slightly increased. The services sector's sales price expectations index also rose, reaching a 10-month high and remaining above pre-COVID norms.

Despite the weakness in economic activity, these findings from the survey could heighten concerns among ECB policymakers regarding the strength of domestic price pressures.