Eurozone economic sentiment edges up but doubts remain
Business sentiment in the Eurozone recovered slightly in May, although the rise undershot expectations as countries reopen their economies.
The European Commission’s economic sentiment indicator edged up to 67.5 in May from its record low of 63.8 in April. For comparison, the gauge stood at 102.5 in January.
Analysts had expected a rise to 70.3, however, suggesting that the single currency area’s firms are still pessimistic about what lies ahead, even as lockdowns are lifted.
Worryingly for Eurozone policymakers, sentiment in the dominant services sector actually fell again in May.
It comes as the European Union prepares to thrash out a deal on a joint recovery fund aimed at helping the bloc rebuild after coronavirus passes.
European Commission president Ursula von der Leyen yesterday proposed a €750bn recovery plan that would raise money through the commission itself selling bonds.
Of the fund, €500bn would be handed out as grants to countries most in need while €250bn would be given as loans.
The plan has the backing of the two Eurozone powerhouses Germany and France. But it is likely to be opposed by the so-called frugal four of the Netherlands, Austria, Sweden and Denmark, which want to see any recovery money given out as loans.
In a positive sign, the indicator for employment expectations picked up considerably in May. It rose 11.3 points and “reflects significantly improved employment plans in all surveyed sectors,” the Commission said.
It added that the rise “compensated for around a fourth or a fifth of the decreases registered over March and April”.
Consumer confidence also recovered somewhat, with the gauge rising 3.2 points. The Commission said this was “on the back of households’ much improved expectations in respect of their financial conditions, their intentions to make major purchases and the general economic situation”.