Upcoming new elections in Greece, the Spanish banking crisis and an economic recovery slowdown in the euro zone are increasing uncertainty among consumers and companies. Economic confidence in the euro zone declined more than forecast in May to the lowest level in more than two years.
According to the data from the European Commission released today, an index of executive and consumer sentiment in the 17- nation sharing euro fell to 90.6 from a revised 92.9 in April. Thatâ€™s the lowest level since October 2009.
A gauge of sentiment among European manufacturers fell to minus 11.3 from minus 9 in April, services confidence index dropped to minus 4.9 from minus 2.4, while an indicator of consumer sentiment rose to minus 19.3 from minus 19.9. Sentiment in the construction industry also declined this month.
An indicator of export orders fell to minus 19.6 from minus 17.3, while an index of employment expectations also declined from April.
Euro zone manufacturing and services output contracted more than economists estimated in May, and German business sentiment had the steepest decline since August.
With European austerity measures undermining consumer spending and economic growth, the euro zoneâ€™s economy may struggle to gather strength in the current quarter after stalling in the previous three months.