EMU’s Business Sentiment on the rise – ING

FXStreet (Edinburgh) - Analyst at ING Bank Teunis Brosens reviewed the recent publications in the euro area.

Key Quotes

“After weeks of slightly disappointing Eurozone data, today’s economic sentiment index released by the European Commission is slightly better than expected”.

“The modest fall in consumer confidence (already published last week) was offset by improvements in the business sector, resulting in the May headline sentiment index remaining flat at 103.8. Consensus was looking for a small decline”.

“All in all, Eurozone sentiment remains above average and hiring intentions have increased further in all sectors except construction”.

“This bodes well for Eurozone domestic demand in the near future. The ECB can claim credit for the fact that consumers’ price expectations, although still at low levels, continue to increase”.

“However, weak selling price expectations in the services and retail trade sectors indicate that inflationary pressures remain weak for the time being”.

“The recovery of selling price expectations in the industry sector indicates that inflationary pressures are rebuilding in the early stages of the value chain. The ECB can therefore safely conclude that QE is helping to restore inflation expectations, but that the work is far from done yet”.