Confidence in Eurozone
Confidence in the eurozone economy improved in May to its highest level in more than three years as restaurants, hotels, and shops in the region began to reopen, backed by an accelerated vaccination campaign in the region, Bloomberg reported. Visit DPL Shop.
The European Commission’s (EC) sentiment index rose to 114.5 points, surpassing most estimates by Bloomberg economists. The growth is due to growing optimism in the services sector, although industry, retail and construction are also improving.
The data support evidence that companies and consumers are turning their backs on a difficult start to the year, when only slow progress on vaccination has been reported due to the repeatedly extended national anti-epidemic blockades. Many countries are now gradually loosening coronavirus restrictions, boosting prospects for demand recovery in the summer months.
The confidence in May
In May, confidence grew “noticeably” in all six largest countries of the European Union (EU). The euro area services sector reported a third consecutive significant improvement, with managers being more optimistic about demand.
Consumer sentiment is also improving for the fourth month in a row, and employment expectations are even more optimistic.
The economy is supported by massive monetary and fiscal stimuli. The European Central Bank (ECB) has promised to ensure that companies and households receive the financing they need on favorable terms to support economic recovery. The institution will discuss its policy during a meeting on June 10, when it will also discuss new economic forecasts.
Economists, including ECB President Christine Lagarde, have signaled that the regulator may continue to buy bonds at an accelerated pace to halt rising yields on government securities after some experts began to argue that the economy may already be strong enough to handle fewer incentives back in July.
Economists and investors have lowered their expectations for a slowdown in ECB support, and Bloomberg Economics forecasts that the rate of bond purchases will remain at around 85 billion euros per month in the third quarter.
One potential area of concern is shrinking supply in production, which increases costs. As industrial sentiment improved in May based on managers’ assessment of current orders, production expectations were clouded.