In March, the European Commission confidence indicators showed a further deterioration in economic confidence. The headline index dropped from 65.3 to 64.6, while a stable outcome was expected. Industrial (-38 from -36), services (-25 from - 24) and consumer confidence (-34 from -33) declined further, while construction confidence stabilized at -32 and retail confidence improved marginally (-18 from -19). Overall, employment deteriorated further. The business climate indicator dropped from -3.40 to -3.58. The worsening in the EC confidence indicators might be a bit disappointing after the slight uptick in the PMI’s.
In Spain, inflation fell unexpectedly into negative territory in March. On a yearly basis, inflation dropped by 0.1% Y/Y, while an increase by 0.3% Y/Y was expected. Also in Belgium, CPI inflation slowed more than expected to an annual 0.62% Y/Y. These data raise fears that euro zone inflation will slow sharper than expected in March and might come out below the expected 0.7% Y/Y. A significantly lower figure might increase talks about inflation.
