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Eurozone business sentiment fell in January to the lowest level in two years amid a decline in executives’ view of current conditions and their outlook for the future.

A European Commission gauge of business climate across the bloc fell 0.17 points to 0.69 in January from the previous month. This was worse than the reading of 0.75 forecast by economists in a Reuters poll.

“Managers’ assessment of the past production worsened significantly. Also production expectations deteriorated strongly, as did the appraisals of the stocks of finished products and of both overall and export order books,” the report said.

The economic sentiment index dropped to 106.2 in January, the lowest level since November 2016 and below market expectations of 106.8. The index is now 9 points below its record high in December 2017. The drop over the past year wiped out the gains in the previous year when it increased by 8 points to January 2017.

Declines in optimism among businesses come as some of the eurozone’s biggest economies, including Germany, have shown signs of strain.

Still, both eurozone services demand and overall confidence “remain above their long-run averages, and are far above levels previously associated with broad-based economic downturns and recessions”, said Claus Vistesen, economist at Pantheon Macroeconomics.

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