Eurozone: Economic confidence reached peak performance - Rabobank

Economic confidence in the Eurozone reached peak performance at the end of last year, but has since then started sliding, notes the research team at Rabobank.

Key Quotes

“Last week’s PMI weren’t to write home about, for instance. Yesterday, the European Commission’s Economic Sentiment Indicator – or ESI – dropped for a third straight time after a 17-year high had been reached in December. The reading of 112.6 for March also fell short of the 113.3 consensus, but optimists would (rightfully) argue that the ESI is still at a very high level that points at a solid expansion of around 0.7% q/q. This is still well above trend growth of roughly 0.4% q/q or even our own rosy forecast of 0.6% q/q.”

“The ESI nevertheless showed a worsening of sentiment in services, manufacturing and retail, and an improvement in construction. The final reading of consumer confidence, another component of the ESI, remained unchanged at 0.1. This loss in momentum may eventually start to weigh on markets. For one, the main reason why the markets sanguinely viewed Italy’s politics as an idiosyncratic risk was the strong economic momentum.”