Eurozone Sentix Investor Confidence dropped to -1.5 in January, down from -0.3 but beat expectation of -2.0. Still, that’s the fifth decline in a row and situation and expectation fell slightly once again. Sentix noted that “What is worrying about the current loss of momentum is the policy’s unwillingness to react, which is obviously unaware of the possible implications. Investors do not expect a quick reaction from the central banks either.”

Also, Sentix added that “The US President, too, is becoming increasingly entangled in a secondary war theatre, and the US shutdown is strengthening the downward momentum in the USA as well. The US overall index falls for the third time to only 6.6 points. Eastern Europe and, above all, Latin America are viewed somewhat more positively.”

On Eurozone, Sentix warned that “the eurozone is dangerously close to stagnation”. And, “Neither politicians nor central banks seem to have really grasped the extent of this loss of momentum. The EU Commission’s agreement with Italy in the trade dispute is on the credit side. But the continuing protest of the yellow vests in France could weigh more heavily. The possible “hard Brexit” and the lack of support from the global economy remain negative factors.”

Full release here.

Eurozone CPI slowed to 1.6% yoy in December, down from 2.0% yoy and missed expectation of 1.8% yoy. Core CPI was unchanged at 1.0% yoy.

PPI dropped -0.3% mom rose 4.0% yoy, versus expectation of 0.2% mom, 4.1% yoy.

Eurozone PMI services was finalized at 51.2 in December, down from November’s 53.4. PMI composite dropped to 51.1, down from prior month’s 52.7. It’s also the lowest level in over four years. Among the countries, France PMI composite worsened further to 48.7, a 49-month low. Germany PMI composite dropped to 51.6, 66-month low. Italy, on the other hand, recovered to 50, a 3-month high.

Chris Williamson, Chief Business Economist at IHS Markit said:

“The eurozone economy moved down another gear at the end of 2018, with growth down considerably from the elevated rates at the start of the year. December saw business activity grow at the weakest rate since late-2014 as inflows of new work barely rose. Levels of unfinished business are now falling for the first time in nearly four years as previously-received orders are not being fully replaced with new work.

“The data are consistent with eurozone GDP rising by just under 0.3% in the fourth quarter, but with quarterly growth momentum slowing to 0.15% in December.

“While a drop in business activity in France could be partly blamed on the ‘yellow vest’ protests, the rest of the region lacks any such mitigating factors, albeit with the recent weakness of the autos sector hopefully a temporary set-back.

“Importantly, with expectations of output dropping to the lowest for over four years, companies are not anticipating any imminent revival in demand. Worries reflect multiple headwinds from trade wars, Brexit, heightened political uncertainty, financial market volatility and slower global economic growth.

“Employment growth has already taken a knock as companies take a more cautious approach to hiring in the face of weaker order books. Jobs growth has hit a two-year low.

“Better news came in the form of an easing in price pressures to the lowest for over a year, which should provide some breathing space for the European Central Bank to review its policy guidance.”

Full release here.