Eurozone Economic Sentiment Remains Stable In May

(RTTNews) - Eurozone economic confidence remained unchanged at its second highest level in nearly four years in May despite the ongoing Greek crisis, survey results from the European Commission showed Thursday.

The economic sentiment index held steady at 103.8 in May, while it was forecast to fall to 103.5. This was the second highest score since July 2011. The April figure was revised up from 103.7.

The stabilization in sentiment resulted from increasing confidence in the services, retail trade and construction sectors being offset by consumer confidence decreasing for a second month in a row.

IHS Global Insight's Chief Economist Howard Archer said the fact that overall economic sentiment held up well in May could ease concern that the Eurozone's recovery is starting to flag as the recent stimulus it has received is diluted by a recent firming in the euro, oil prices and bond yields from very low levels.

In the first quarter, economic growth improved to 0.4 percent from 0.3 percent in the fourth quarter. The EU has forecast the 19-nation bloc to grow 1.5 percent this year and 1.9 percent in 2016.

The industrial confidence index came in at -3 versus -3.2 a month ago. The marginal improvement was due to managers' more optimistic production expectations, which slightly outweighed their worsened assessment of stocks of finished products.

The services sentiment indicator rose to 7.8 from 7 in April. This was driven by managers' brighter demand expectations and their significantly better assessment of the past business situation.

Consumer confidence weakened due to worse assessments of the future general economic situation, future unemployment and future savings, while consumers' expectations of their financial situation remained broadly unchanged. The corresponding indicator fell to -5.5 in May, in line with initial estimate, from -4.6 in the prior month.

Confidence in the retail sector improved due to more positive views on all its components. The index rose to 1.4 from -0.8 a month ago. The adequacy of the volume of stocks and managers' assessment of the present business situation improved notably.

The indicator for construction climbed to -25 in May from -25.5. The positive development in construction confidence resulted from an upward revision in managers' assessment of the level of order books which was only partly offset by weaker employment expectations.

Another report from the EU showed that business confidence dropped slightly by 0.05 points to 0.28 in May. The expected score was 0.35.

Managers' production expectations improved, while their assessment of overall order books and export order books remained broadly unchanged. By contrast, their assessment of past production trends and stocks of finished products worsened.