Eurozone’s consumer sentiment likely edged up in September

Consumer sentiment in the euro area is likely to have risen slightly in September. The sentiment index has been on a general downward trend since March 2015, following a sharp increase. However, the headline print of -8.5 in August was still a healthy 0.5 standard deviation above average.

The September figure is expected to have improved further to -8.1 given the benign newsflow and positive signals in national surveys, said Societe Generale in a research report. The European Commission’s consumer confidence indicator is based on questions regarding the general economic situation, savings and consumers’ financial situation in the coming 12 months.

Meanwhile, the INSEE French business sentiment is expected to have remained strong in September. The survey has been showing a significantly better scenario of the French economy as compared to the PMIs for some time.

The data for August for the overall business climate was stable and a bit above the long-term average of 100. Given that the holiday season is over and the rebound in companies’ profit margins, there is no reason for any weakening in September, stated Societe Generale. Admittedly, the risks to the projections are possibly skewed to the upside.

“A value of 101 for the business climate would be consistent with GDP growth of around 0.3 percent qoq in 3Q16, in line with our forecast”, added Societe Generale.