Economic sentiment improved in April but only marginally and from a weaker revised March base. At 99.3, this month's reading was only 0.1 point above its end of quarter mark and 0.5 points short of the market consensus. The latest outturn means that sentiment has been broadly flat and just below its 100 long-run average since last November.

At a sector level, confidence declined in industry (minus 2.6 after minus 0.5) but rose in services (10.5 after 9.6), retail trade (minus 1.0 after minus 1.5) and in the consumer sector (minus 17.5 after minus 19.1). Construction (1.0) was unchanged.

Regionally, the national ESI improved quite sharply in Spain (103.6 after 99.9) and also gained ground in Germany (98.7 after 97.9) and Italy (104.9 after 104.6). However, France (93.3 after 97.5) posted a sizeable drop on the back of weaker industrial confidence which probably suffered from strikes and rioting over pension reform. Consequently, only Italy and Spain stand above the common 100 historical mean.

Ahead of next week's ECB meeting, there was significantly better news on inflation. Selling price expectations fell steeply in manufacturing (12.0 after 18.1) and also declined in services (20.2 after 24.0). In addition, household inflation expectations (15.1 after 18.8) were similarly pared.

The April update is consistent with an apparent pick-up in the Eurozone economy last quarter losing some steam. However, this will not trouble an ECB strongly focused on tackling overshooting inflation. That said, the broad-based fall in inflation expectations should go down well at the central bank and might be enough to tip the scales in favour of just a 25 basis point tightening. Key will be the flash April HICP report, due next Tuesday.

The April data trim the Eurozone ECDI to 14 and the ECDI-P to 16. However, both measures continue to signal a modest degree of overall economic outperformance versus market expectations.

Economic sentiment, which in March edged lower to 99.3, is expected to rise back to a consensus 99.8 in April.

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.