Euro Area: Economic sentiment ticks up but remains abysmal in May

Euro Area Economic Sentiment May 2020

Euro Area: Economic sentiment ticks up but remains abysmal in May

Sentiment in the Eurozone recovered some very limited ground in May from April, still weighed down by measures adopted to contain the spread of coronavirus. It ticked up from an all-time low of 64.9 points in April to 67.5 points in May. Consequently, sentiment in the Eurozone remained deeply entrenched below its long-run average of 100 points, and logged the second-lowest reading ever after March 2009.

May’s uptick came on the back of recovering sentiment in industry and among consumers. Moreover, financial services confidence also picked up. On the other hand, confidence in the services sector continued to weaken, as did sentiment in the construction sector, while retail trade confidence remained virtually unchanged. A notable increase in employment expectations was recorded across all surveyed sectors.

Among the largest economies of the Euro Area, sentiment strengthened somewhat in Germany and the Netherlands and, to a lesser extent, in Spain. On the other hand, it dipped in France.

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

“Just a small tick up in sentiment after the historical drop in April was not what was expected for May. Economies are starting to reopen and most eurozone countries saw the bottom in terms of daily activity at the end of April. With factories also reopening, a larger improvement in sentiment was to be expected. […] A further deterioration in services sentiment despite easing lockdowns buries hopes of a swift recovery.”

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