The Economic Sentiment Index (ESI) for the Eurozone decreased slightly to 96.2 in September 2024, down from 96.5 in August. This decline follows a recent peak in August, when the index reached its highest level in over a year. The September figure also came in slightly below market expectations.

Sectoral Breakdown

The overall dip in sentiment was primarily driven by a downturn in the industrial and retail sectors, reflecting growing concerns about slowing demand and rising input costs. Manufacturers, in particular, have reported weaker order books and production expectations, contributing to the slide in industrial sentiment.

Conversely, there were notable improvements in the services, consumer, and construction sectors. The services sector continues to benefit from post-pandemic recovery and tourism activity, while consumer sentiment has been buoyed by easing inflationary pressures. The construction sector has also seen better-than-expected performance, driven by ongoing public and private investment projects.

Economic Outlook

The mixed results highlight the uneven recovery across different sectors in the Eurozone. While services and construction are seeing positive momentum, challenges remain for manufacturing and retail, where companies face high costs and sluggish demand. The Eurozone economy continues to grapple with inflation, energy prices, and tighter financial conditions, factors that may weigh on future growth.