Sentix: Moderate improvements, no real sign of recovery

Investor confidence regarding economic activity in the euro area rose below expectations in December 2023, according to the latest report from Sentix GmbH.

The aggregate index rose to -16.8 points, the highest level since June 2023, from -18.6 points in the previous month, while the current situation index increased by 3.3 points, to -23 .5 points, and the expectations index rose to -9.8 points, the highest level since February 2023, from -10 points.

"Both in the euro area and internationally, the picture is the same: moderate improvements, but no real sign of a recovery", the report from Sentix states, where it is also emphasized that "so far, there are no signals for a new growth in no region".

On the other hand, the improvement in inflation prospects leads investors to hope not only for the cessation of the monetary policy restriction process, but to even expect support from the central banks.

Against the backdrop of improving global expectations, Germany and Eastern Europe were maintained in the "recession" category. The United States and Japan were downgraded to "tempering" and "stagnation" from the "stabilization" category, and the Asian economies, excluding Japan, were downgraded to "slight recovery" from "stagnation."

In the euro area's largest economy, Germany, the aggregate confidence index registered another slight increase of 1.8 points to -25.5 points, the highest level since June 2023. The current situation index increased by 2.5 points, up to -35.3 points, and the index of expectations for the next six months decreased by 1.3 points, up to -15.3 points.

"There is no signal of recovery in Germany," according to Sentix analysts.

Across the ocean, "the American economy can still be described as extremely robust," given that "the stable labor market is the strength and Achilles heel of the American economy." The current conditions index rose 1.3 points to 19.3 points, the highest level since April 2022. The aggregate confidence index rose to 5.6 points, from 5 points, as the expectations index remained at -7.3 points.

The aggregate confidence index for Asia, excluding Japan, increased in December 2023 by 1.4 points, up to 4.1 points, while the expectations index increased up to 6.3 points, from 4.3 points , and the current situation index increased by 0.7 points, up to 2 points.

Japan's economy moved into the "stagnant" category, as the aggregate index of investor confidence rose by 0.1 points to 4.6 points, the highest level since March 2022, amid a drop in the expectations index by 0.5 points, up to zero, and an increase of 0.8 points in the current situation index, up to 9.3 points.

Eastern Europe was maintained in the "recession" category due to the increase of the aggregate index by 1.9 points, up to -19.2 points. The current situation index increased to -27.5 points, from -29 points, and the expectations index increased to -10.5 points, the highest level since February 2023, from -12.8 points.

As "the war fronts seem to have hardened and exhaustion is spreading everywhere", the Sentix analysts ask whether the time has not come for negotiations in Ukraine, which could boost the hope of recovery in Eastern Europe.

The situation of the Swiss economy improved in the last month of the year, as the aggregate confidence index increased to 3.3 points, from -2.3 points in the previous month. The index of the current situation increased to 10.5 points, from 3.5 points, and the index of expectations increased by 4.2 points, to -3.8 points.

For the Austrian economy, the aggregate index registered a further decrease, by 2.3 points, to -23 points. The expectations index increased to -9.5 points, from -15 points, while the current situation index decreased by 9.2 points, to -35.5 points.

Latin America remained in the "decline" category due to the slight increase in the aggregate confidence index, up to -10.2 points, from -11.5 points, in the conditions of the 0.5 point increase in the current situation index, up to -16.3 points and the increase of the expectations index by 2 points, up to -4 points.

Against the background of an economic regime characterized by a slight downward trend, the aggregate index of confidence at the level of the global economy registered an increase of 1.3 points, up to -2 points, while the index of the current situation increased up to -2 .5 points, from -3.8 points, and the expectations index registered an increase of 1.2 points, up to -1.6 points.

Sentix's confidence index for December 2023 was built on the basis of a survey of 1,245 investors, of which 239 were institutional investors.