Eurozone: Growing at cruising speed - ING

The European Commission’s economic sentiment indicator stabilised in April after 3 consecutive declines as the Eurozone growth has now reached cruising speed, though there is no indication yet of a re-acceleration, according to Peter Vanden Houte, Chief Economist at ING.

Key Quotes

“The soft patch in Eurozone economic data is not worsening anymore, though it’s probably too early to talk of an improvement. Indeed, the European Commission’s economic sentiment indicator (ESI) stabilized at 112.7 in April, above the 112 consensus expectation. The more cyclical Business Climate Indicator fell to 1.35, the fourth consecutive decline.”

“There was a sentiment improvement in industry (+0.1) and consumer confidence (+0.3), while services (-1.0), retail trade (-1.3) and construction (-0.7) disappointed.”

“Forward-looking indicators such as order books declined slightly. Employment plans were also revised downwards in industry and construction, while they remained broadly unchanged in services and the retail sector. So while the level of economic activity remains satisfactory, a re-acceleration is not yet in the offing.”

“The inflation story remains a mixed bag.”

“Overall the pipeline inflation pressures that were visible at the end of 2017, seem to be softening somewhat. Consumer price expectations remained flat. These figures don’t suggest a rapid pick-up in underlying inflation. Core inflation might even fall back when the upward price impact of the early Easter holidays disappears again.”