March — MNI analysts survey — Feb Rev from
lowest median highest
————————————————————————
Econ Sentiment 94.4 93.8 94.2 95.0 94.5 94.4
Industry -7.2 -7.0 -6.0 -5.0 -5.7 -5.8
Services -0.3 -1.1 -1.0 0.5 -0.9 —
Consumers -19.1 na na na -20.3 —
Retail -12.2 na na na -14.0 -14.3
Construction -26.5 na na na -24.6 -24.5
————————————————————————
Business Climate: -0.30 -0.30 -0.20 -0.10 -0.16 -0.18

PARIS (MNI) – The recovery in Eurozone economic morale since the
end of last year was interrupted in March, as a setback in industry and
construction offset improvements in other sectors, the European
Commission said Thursday.

After a 1.7-point upturn from December’s two-year low, the
Commission’s sentiment index slipped 0.1 point to 94.4. Most analysts
had expected little change on the month but were split on the direction.

Among the largest economies, sentiment improved in Italy (+3.5
point) and France (+2.0), but eroded in Germany (-2.4), the Netherlands
(-1.3) and Spain (-1.1). Only in Germany is the index above average.

Other leading indicators have also been mixed of late, suggesting
that economic activity will regain little momentum in the short term.
The March PMIs declined for the second month in a row. Ifo’s surveys
show German business sentiment eroding in all sectors except retail. By
contrast, Insee’s surveys show French sentiment recovering in March for
the first time in a year.

Eurozone industry morale deteriorated more than expected in March.
Firms’ assessment of order books and past and expected production all
weakened, while their view of export order books improved slightly.

The Commission’s separate Business Climate Indicator also suffered
a setback after three months of recovery, slipping 0.14 point to -0.30.
The decline was mainly driven by a more negative assessment of
production expectations, order books and past production. Managers’
assessment of finished goods stocks was broadly unchanged, while export
order books were assessed slightly more positively.

The Eurozone factory PMI fell 1.3 points in March to 47.7, dragged
down by a downturn in production (48.8) and a steeper slide in new
orders (45.6) including export orders (45.6). The BNB’s manufacturing
indictor suffered a setback in March as well.

After a modest downturn in February, the Commission’s sentiment
index for the services recovered more than generally expected, thanks to
a more positive assessment of past business and demand; but demand
expectations weakened slightly.

By contrast, morale in the financial services eroded somewhat after
a sharp recovery since December. While recent business and demand
deteriorated, the outlook for demand rose markedly to the highest level
in eight months.

The Eurozone services PMI was marginally weaker in March at 48.7
and the faster drop in new business (48.3) points to little relief in
the near term.

The Commission’s flash estimate for consumer sentiment was revised
down marginally to show a 1.2-point monthly gain to -19.1 — still 6.4
points below the long-term average. Households were less pessimistic
about the general economic situation and labor market trends. While they
felt worse off than a year ago, they hoped their financial situation
would improved over the coming 12 months. They were more inclined to
make large purchases now and over the coming year.

Retail sentiment brightened for the second month in a row,
returning to December’s level on the back of rising turnover and hopes
for stronger sales in the near term.

Construction morale reversed gears in March, retracing nearly half
of the recovery since December due to an erosion in employment
prospects. But builders were less pessimistic about recent activity and
order books and hoped for an improvement in prices.

Hiring expectations also deteriorated in industry but brightened in
other sectors, notably the financial services.

While near-term sales price expectations were higher in all
sectors, consumers were less worried about inflation prospects for the
year ahead.

–Paris newsroom +331 4271 5540; email: ssandelius@marketnews.com

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