28 Apr 2016
Eurozone sentiment recovers after downbeat Q1 - ING
Teunis Brosens, Senior Economist at ING, notes that the sentiment improved especially in the domestically oriented services sector, showing that we should not give up on Eurozone domestic demand just yet.
Key Quotes
“After 3 consecutive months of decline, April saw Eurozone sentiment recover some of the lost ground in all sectors except retail trade. It is likely that external weakness, stock market turmoil and domestic political challenges all took their toll on sentiment in previous months. With financial markets moving into quieter waters recently, sentiment bounced back. Among the major economies, Italy saw sentiment jump to a four-month high, while Germany and the Netherlands also registered improvements. Sentiment continues to soften however in France and Spain.
The details contain some more slivers of good news. Producers reported a slight pickup in employment expectations after a weak first quarter. Encouragingly for the inflation outlook, selling price expectations improved as well.
While sentiment was weak in Q1, hard indicators held up better. We therefore expect tomorrow’s flash Eurozone GDP estimate to show Q1 growth of 0.3%, the same rate as in the preceding two quarters. Improved selling price expectations will not prevent April headline inflation from remaining non-existent at an expected 0.0% tomorrow. A pickup of inflation will have to wait until the second half of the year, when oil price base effects start to push up the headline rate.”
Key Quotes
“After 3 consecutive months of decline, April saw Eurozone sentiment recover some of the lost ground in all sectors except retail trade. It is likely that external weakness, stock market turmoil and domestic political challenges all took their toll on sentiment in previous months. With financial markets moving into quieter waters recently, sentiment bounced back. Among the major economies, Italy saw sentiment jump to a four-month high, while Germany and the Netherlands also registered improvements. Sentiment continues to soften however in France and Spain.
The details contain some more slivers of good news. Producers reported a slight pickup in employment expectations after a weak first quarter. Encouragingly for the inflation outlook, selling price expectations improved as well.
While sentiment was weak in Q1, hard indicators held up better. We therefore expect tomorrow’s flash Eurozone GDP estimate to show Q1 growth of 0.3%, the same rate as in the preceding two quarters. Improved selling price expectations will not prevent April headline inflation from remaining non-existent at an expected 0.0% tomorrow. A pickup of inflation will have to wait until the second half of the year, when oil price base effects start to push up the headline rate.”