Eurozone’s economic sentiment showed signs of improvement for the second straight month, according to results revealed by a survey on Monday, due to greater optimism among consumers that led to pickup in inflation expectations across the 19 countries.
The Economic Sentiment Indicator, a parameter used by the European Union’s Executive Commission for its monthly survey rose to a four-month high of 104.7 points in May from 104.0 in April.
The survey recorded more confident responses over the general future of the Eurozone economy from all fields. Consumers as well as industry managers sounded more profuse in their expectations for employment as well as savings. Industry orders are expected to recover as well.
Among all, France witnessed the strongest rise in confidence, only to be followed with a smaller uptick in Germany. The industry and retail sector of the economy expressed great deal of interest in hiring, following the potential boom the region is likely to witness in the near term.
In a sign of confidence in consumer demand, companies were expecting to raise their selling prices, particularly in industry and services but also, to a lesser extent, in the retail and construction sectors, reports mentioned.
That will be encouraging news for the European Central Bank, which has unleashed a series of monetary stimulus programs to raise consumer price inflation. Inflation has remained at -0.2 percent annually, far below the ECB's 2 percent target. Low inflation is a sign of a weak economy and can become ingrained, weighing on growth for years.
The ECB is scheduled to meet on June 2 to reassess its policies but is expected to stay on hold, including interest rate cuts and an increase to its bond-buying stimulus program to take effect.
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