Amid renewed debt worries, euro economic sentiment falls in March

Mar 30, 2011, 12:51 GMT

Brussels - Economic sentiment in the 17-member eurozone fell in March while it remained stable in the wider European Union, the European Commission's closely-watched Economic Sentiment Indicator (ESI) showed Wednesday.

The data was announced in the wake of growing concerns over a renewed eurozone debt crisis, with credit rating downgrades on Tuesday for Greece and Portugal fueling fears that Athens might default on its debt and Portugal would soon need an EU-led bailout.

The ESI dropped to 107.3 in the eurozone, down 0.6 points from February, while the index was 'broadly unchanged' from the previous month at 107.4 for the EU, the commission said in a statement.

'The overall decline in the euro area resulted from broadly unchanged sentiment in industry and weakening confidence in the other business sectors and among consumers,' the EU executive explained.

'In the EU, industry and services remained on an upward trend offsetting the declines observed in retail trade, construction and among consumers,' it added.

Separately, the commission said that its Business Climate Indicator (BCI) had dropped to 1.41 in March, down from 1.46 in February.

The Brussels-based body also said in its Quarterly Labour Market Monitor that the EU's tentative economic recovery had produced 'moderate increases in employment,' with the fourth quarter of 2010 showing a 0.3-per-cent year-on-year increase - reversing the negative trend of the previous four quarters.

'However, the marked impact of the crisis on young people, migrants and the low-skilled is still evident. Moreover, the slight progress in employment is mainly due to part-time and temporary jobs,' the commission's report cautioned.

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