Eurozone Economic Confidence Rises Unexpectedly

(RTTNews) - Eurozone economic confidence improved unexpectedly in May on rising sentiment among consumers and service providers, survey results from the European Commission showed Thursday.

The economic sentiment index rose to 93.5 in May from 93.2 in the previous month. The score was expected to fall to 92.8.

The survey showed that the rebound in confidence in services and among consumers was offset by declines in industry, retail trade and construction.

Driven by managers' assessments of the past business situation and their expectations for future demand, the services confidence index climbed to 2.2 from 1.4 in the previous month.

Similarly, the consumer sentiment index posted -19.0, unchanged from the flash estimate, and up from -20.6 in April. The rebound reflects less pessimistic view about household's future financial situation, their intentions to make major purchases over the next 12 months and the future general economic situation.

Due to a continued deterioration in managers' production expectations and a worsened assessment of the current level of stocks of finished products, the industrial sentiment index fell to -8.0 from -7.7 a month ago.

The retail trade confidence index dropped to -10.9 from -10.0 due to marked worsening in retailers' assessments of the volume of stocks.

The construction sentiment index declined to -3.6 from -2.8 in the prior month. Builders' assessment about the level of order books worsened and employment expectations weakened.

The survey showed that managers' selling price expectations eased across all business sectors in May, interrupting the steep upward trend seen in the recent two months.

Employment expectations improved in May but remained below the long-term average. ING economist said Bert Colijn said the outlook for the economy is clearly weighed down by the Middle East war. April and May both showed a slow economic environment with downside risks to growth, the economist noted.

"… it remains clear that a resolution of the Middle East conflict cannot come soon enough for the fragile eurozone economy," said Colijn.