Euro area’s economic sentiment index rises in June

Euro area’s June economic sentiment survey results showed a comparatively widespread rebound in activity after the deep retrenchment of recent months, noted Daiwa Capital Market Research in a report. All of the headline sectoral indices for the euro area rose to their highest levels since March as restrictions continued to be eased. Nevertheless, while expectations of future production and demanded recovered, the rebound in overall sentiment was possibly slightly less than expected. The euro area Economic Sentiment Indicator rose 8.2 points to 75.7, implying that little more quarter of the fall in activity from the pre-pandemic level in February to the trough in April has been reversed.

As expected, the Commission survey implied that rebound continues to be softest in services – having recorded a series low in May, the headline index for the sector recovered only 15 percent of the ground lost since before the coronavirus hit and remained well below the range in the global financial crisis in spite of the stronger demand expectations.

In the meantime, even if the respective indicator recorded the biggest rise this month as consumer willingness to make major purchases revived, retail confidence still reversed barely more than one third of the fall from February. Looking at other detail, the survey recorded a second straight month of greater optimism regards the employment outlook, with around half of the initial falls in the respective indices reversed and an easing of consumer fears about unemployment registered too.

“The ECB will also have been encouraged to see a rebound in selling price expectations in industry, services and retail trade”, said Daiwa Capital Markets Research.