Eurozone economic confidence improved in March with a magnitude of growth that was fastest since last summer’s steep recovery after the first phase of the Covid-19 pandemic, survey results from the European Commission showed on Tuesday.
The economic sentiment index climbed to 101.0 in March from 93.4 in the previous month. The score was above economists’ forecast of 96.0 and was also the highest since February 2020.
Nonetheless, sentiment was below its pre-pandemic level and with virus restrictions now in place for longer, a sustained rise in the coming months seems unlikely, Jessica Hinds, an economist at Capital Economics, said.
Industry confidence increased for the fourth month in a row, thanks to very positive developments in all its components, namely managers’ production expectations, their assessments of the current level of overall order books and the adequacy of the stocks of finished products.
The corresponding sentiment index rose unexpectedly to 2.0 from -3.1 in the previous month. The score was forecast to fall to -5.0.
As households’ expectations improved both in respect of the general economic situation in their country, and their personal situation, the consumer confidence index rose to -10.8, in line with flash estimate, and up from -14.8 in February.
Services confidence posted the first sharp pick-up since September last year, driven by managers’ much more optimistic demand expectations. The services confidence indicator improved to -9.3 from -17.0 a month ago. The expected score was -14.4.
The retail trade confidence indicator rose to -12.2 from -19.1 in the previous month.
The rise in retailers’ confidence reflected marked improvements in all components of the indicator, namely managers’ assessments of the past business situation, the adequacy of the volume of stocks and their expected business situation.
Construction confidence brightened in March, with the index rising to -2.7 from -7.5 in February, thanks to managers’ significantly improved employment expectations and appraisals of the level of order books.
Selling price expectations surged in all surveyed parts of the economy, namely industry, services, retail trade and construction, the survey showed. Also consumer price expectations increased in March.
Although inflation is likely to rise this year, there is still little sign of longer-term inflationary pressure, Capital Economics’ economist Hinds added.
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