Euro Area: Economic sentiment soars in April

Euro Area Economic Sentiment April 2021

Euro Area: Economic sentiment soars in April

Sentiment in the Eurozone jumped to 110.3 in April from 100.9 in March, marking the strongest reading since October 2018 and beating market expectations. The index therefore moved further above its long-run average of 100 for the second time since the outbreak of the Covid-19 pandemic. April saw substantial improvements across the board: sentiment in the services, industry, retail and construction sectors increased considerably. That said, confidence in the services sector continued to grow the most. Moreover, employment expectations strengthened markedly. Lastly, selling price expectations surged in all sectors and consumer price expectations increased albeit to a lesser extent.

In terms of specific countries, sentiment rose the most in the Netherlands and it also gained considerable strength in France, Germany, Italy and Spain.

Commenting on the release, Bert Colijn, senior Eurozone economist at ING, stated:

“Selling price expectations in industry are now close to a record high, but they are now also in construction, retail and even the services sector above their long term average. The big question is how temporary these price increases will be. Will they disappear once some of the supply chains problems are resolved? With strong demand to be expected in the second half of the year and a further inventory build-up in the offing, we doubt that price tensions will disappear quickly.”

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