BRUSSELS (MktNews) - The European Commission's economic sentiment index for the eurozone fell in February to the lowest level since October 1999, as all components of the index dropped, the Commission reported Friday.
The decline in sentiment is another sign that the eurozone economy is slowing early this year and will increase calls from some analysts for the European Central Bank to cut interest rates soon. However, ECB President Wim Duisenberg said Thursday that eurozone sentiment remains high and that the central bank still expects eurozone growth this year to be near 3%.
The eurozone sentiment index stood at 102.7 in February, down from 103.1 in January (revised from 103.0). The February result was below all forecasts in a Market News survey.
Eurozone industrial sentiment showed the largest drop, to +1 in February from +3 in January (revised from +2) and +5 in December. The decline was larger than most forecasts in a Market News survey and stood at the lowest level since January 2000.
Manufacturing production expectations fell to +12 in February from +14 in January and +18 in December. But recent production rose to +10 from +8 in January but was still below the +12 reading in December.
Sentiment on overall manufacturing orders was stable at 0 in February, but down from +4 in both November and December. Export order sentiment rose to 0 from -1 in January.
Eurozone consumer confidence dropped only slightly according to the monthly survey, to -2 in February from -1 in January (revised from -2), but was still the second best reading since August.
Consumers remained quite confident about their finances, with the financial situation of households in the next 12 months staying at record levels (stable at +4), the Commission said. But consumers were more concerned about the general economic situation, with this subindex declining for the second month in a row to -2 from -1 in January and 0 in December.
The eurozone share price index fell for the third month in a row to 279.6 in February from 288.3 in January.
Eurozone construction sentiment fell to -2 in February from +1 in January.
Industrial and consumer sentiment each account for one-third of the overall economic sentiment index. Construction sentiment and share prices each account for one-sixth.
Retail sentiment -- which is not included in the overall economic sentiment index -- was stable at 0 in February after rising from -4 in both November and December. The February reading remained seven points above the long-term average and reinforces expectations that tax cuts in several large EMU states will boost consumer spending in the first half of this year.