Euro area flash economic confidence indicator maintains upward trend in May

The preliminary data showed that euro area economic confidence indicator continued to maintain its upward trend in May. Most euro area economic sentiment surveys have rebounded markedly since the end of 2016.

The flash consumer sentiment indicator for May rose by 0.3 points to -3.3, the highest level in ten years.

Employment has been increasing in all major member states, borrowing rates continue to be low, while political risks have waned after Macron’s victory in the French Presidential elections. Thus, despite the fact that higher inflation has eased real wage growth, there are several reasons why consumers should be slightly more confident when spending their money, noted Daiwa Capital Markets Research.

The latest retail sales print indicated a 0.3 percent sequential rise in the first quarter, while new car registrations grew over 3 percent sequentially, implying that euro area consumption growth was strong in the first quarter, likely widely matching overall economic growth of 0.5 percent sequentially, stated Daiwa Capital. The survey released today hints at a rebound in consumer sentiment, a further rise in consumption growth in the second quarter is possibly on the cards, added Daiwa Capital Markets Research.

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