MNI: Euro Area Economic Sentiment Broadly Stable in May: EC

--European Commission EMU May Economic Sentiment 112.5 vs April 112.7

By Jamie Satchithanantham

     LONDON (MNI) - Euro area economic sentiment was broadly unchanged in May,

stabilising in the first two months of the second quarter after trending lower

over Q1, data released by the European Commission showed Wednesday.

     In May, the euro area Economic Sentiment Indicator (ESI) fell by a modest

0.2 points to 112.5, just 0.3 points below the level registered in March. It

represents somewhat of a stabilisation in sentiment having seen the index recede

fairly rapidly from its local high of 115.1 in December.  

     --LOWER INDUSTRY, SERVICES CONFIDENCE

     The slight drop in the euro area ESI resulted from falls in sentiment in

both the industry and services sectors. Industry confidence, down 0.5 points on

the month to a nine-month low of 6.8, suffered as a result of more pessimistic

output expectations and worsened views of the stick of finished goods. 

     Weaker services sentiment, down 0.4 points to a ten-month low of 14.3, was

largely attributed to a decrease in manager's assessment of past demand.  

     --CONSTRUCTION BOUNCEBACK CONTINUES

     Offsetting this weakness, retail trade confidence posted a strong 1.4 point

rise while construction sentiment boasted a 2.4 point rise, enough to take the

indicator to its highest level since 1990.  

     At 7.0 in May, the construction component of the ESI constituted a record

high, well above the -17.0 series average. 

     --EU ESI POINTS TO UK IMPROVEMENT

     Across the European Union, sentiment increased on the month, up 0.4 points

to 112.8, with the rise driven primarily by the UK and, to a lesser extent,

Poland. Sentiment was up 1.9 points to 17.4 in May in the UK and up 0.6 points

to 109.9 in Poland. 

     The improvement in UK confidence could point to an improvement in the UK's

primary measure of consumer confidence, the GfK Consumer Confidence Index, due

for release Thursday.  

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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