Inflation Expectations Cool in EC Sentiment Survey

EUROZONE APR ECONOMIC CONFIDENCE 99.3 (FCST 99.9); MAR 99.2r

EUROZONE APR CONSUMER CONFIDENCE -17.5 (=FLASH); MAR -19.1

• Economic confidence edged up marginally by 0.1 point to 99.3 in the euro area, indicating four months of the index largely stalling around the 99.2 to 99.7 mark. Eurozone consumer confidence was confirmed at -17.5 (a 1.6-point improvement).
• Waning orders and a dip in production expectations saw industrial sentiment decline for a third month, yet was largely outweighed upticks across services and retail confidence. This adds to the current theme of divergence between manufacturing and services evident in recent PMI data, whereby the latter continues to experience a strong demand push despite pressures of persistently high inflation.
• Spain recorded the strongest economic sentiment uptick, to a lesser extent Germany and Italy, whilst France deteriorated largely due to substantial industrial action.
• Inflation expectations cooled in the euro area in April, with business selling price expectations slowing, led by industrial prices. Consumer price expectations which were the softest since December 2020 and services selling price expectations moderated for a third consecutive month.
• The April developments in inflation expectations is tentatively positive news for the ECB, as they grapple with sticky core inflation, amplified by services prices.