Euro Area: Economic sentiment falls again in April

Euro Area Economic Sentiment April 2022

Euro Area: Economic sentiment falls again in April

Sentiment in the Eurozone fell to 105.0 in April from 106.7 in March. The index nonetheless remained above its long-run average of 100. Sentiment in the construction, industry and retail sectors declined, while sentiment in the services sector was unchanged. Moreover, employment expectations weakened, and consumer sentiment declined in the month. Additionally, selling price expectations soared to record-highs across all sectors.

In terms of specific countries, sentiment decreased in France, Germany, the Netherlands and Spain, while it rose in Italy.

Bert Colijn, senior economist at ING, commented:

“Today’s ESI shows that the outlook for the eurozone has worsened but has not (yet) plunged sharply. In fact, the drop in economic sentiment reflects the high uncertainty going forward.”

Furthermore, Colijn added:

“This worsening economic outlook could also explain why some ECB members seem to be in a rush to hike interest rates. The fear seems to be that the window of opportunity to end net asset purchases and start the rate lift-off could be closing rather soon. This is why we can no longer exclude a first rate hike in July, possibly followed by a second rate hike in September.”

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