Economic confidence in the euro area slipped in November as consumers struggled with an inflation spike and resurgent coronavirus infections that turned the region into a pandemic hotspot yet again. A European Commission sentiment index fell to 117.5 in November from 118.6 the previous month, data released Monday showed.
A gauge for consumers dropped to the lowest in seven months, reflecting deteriorations in households’ assessments of their past and future financial conditions, their intentions to make major purchases and their expectations about the general economic situation.
Confidence in the industrial sector was broadly stable, while it improved for services. Inflation in the euro area probably climbed further above 4% this month, squeezing household budgets. While the European Central Bank still considers the spike to be largely transitory, Executive Board member Isabel Schnabel told Bloomberg in an interview last week that there’s an increasing threat that price pressures might linger for longer. Adding to the challenge are resurgent coronavirus infections across the region and a new variant that might spread more quickly than currently known strains.
Countries including the Netherlands and Germany have already imposed new restrictions to combat a surge in Covid-19 infections, while Austria and Slovakia are now in lockdown.