Economic sentiment deteriorated slightly in March. At 99.3, the latest reading was 0.6 points short of the market consensus but only 0.3 points below its minimally downwardly revised February print. This was only the measure's second decline since last October but leaves sentiment beneath its 100 long-run average and at a 3-month low.

At a sector level, losses in confidence were minor but broad-based. Hence, industry (minus 0.2 after 0.4), services (9.4 after 9.5), retail trade (minus 1.4 after minus 0.2), construction (1.0 after 1.6) and households (minus 19.2 after minus 19.1) all posted losses of less than a full point.

Regionally, the national ESI improved in France (98.0 after 97.3) and Italy (104.6 after 102.6) but slipped in Germany (97.9 after 98.0) and Spain (99.5 after 101.5). As in February, only Italy stands above the common 100 historical mean.

The March update suggests that near-term Eurozone growth prospects remain sluggish at best. Still, that will not worry the ECB which will be much more focused on the inflation indicators. To this end, price expectations are at least moving in the right direction but have some way to go to return to more normal levels. Consequently, subject to developments in global banking conditions, another hike in interest rates in May is still on the cards. Both the Eurozone's ECDI (6) and ECDI-P (7) indicate that economic activity in general is currently performing much as expected.

Economic sentiment in March is expected to rise slightly to a consensus 99.9 versus 99.7 in February.

Released by the European Commission, the economic sentiment index (ESI) provides a broad measure of both business and consumer sentiment. Results are available for all participating countries and aggregated to the Eurozone and European Union level. The survey is very detailed and offers information on demand, output and inflation.

The survey offers key sentiment data across the European Union and the Eurozone region. Data are available for each country and are aggregated for both the Eurozone and EU. It is conducted by the European Commission rather than Eurostat, the compiler of most other EMU data. The index is a broad measure of both business and consumer sentiment in the EU members. Because of its coverage of all the EU countries it is highly regarded in the financial markets as a good indicator of the mood of consumers and industry in each country. It is also normally a good indicator of quarterly GDP.

Confidence indicators are calculated for industry, services, construction, retail trade and consumers. In turn, they are combined into an overall composite number, the economic sentiment indicator (ESI). The data are seasonally adjusted and defined as the difference (in percentage points of total answers) between positive and negative answers. The survey also covers other areas of the economy that are not explicitly included in the ESI. In particular, responses to questions about the inflation outlook are used by the ECB as one means of measuring inflationary expectations.