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Euro area consumer sentiment stabilizes in March

The flash European Commission consumer sentiment indicator, which was released today, implied that euro area consumer confidence stabilized in the month of March. After reaching the highest level since 2000 in January, but fallen the most in a year in February, the sentiment index continues to be the same in March at 0.1, over 1 point lower than the peak at the beginning of the year. This is still high by historical standards – the index averaged just -7.8 in 2016 and -2.5 in 2017 – implying that consumers are not expected to be very hesitant when making spending decisions.

But it might not be the best guide to private consumption growth. Indeed, in spite of the stable rebound in sentiment throughout 2017, private consumption growth disappointed in the second half of the year, with the annual rate falling in the fourth quarter to just 1.3 percent year-on-year lower than half the rate suggested by the sentiment index.

And, while fundamentals, such as the solid labor market, indicate towards a strong rise in spending, it would not be a surprise if the first quarter brought another set of unimpressive private consumption figures, with growth lower than the 0.5 percent quarter-on-quarter rate seen in the first and second quarter of 2017, stated Daiwa Capital Markets Research in a report.

At 18:00 GMT the FxWirePro's Hourly Strength Index of Euro was slightly bearish at - 66.413, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 17.5233. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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