Economic sentiment unexpectedly deteriorated in April. At 95.6, the headline gauge was 0.6 points beneath its marginally weaker revised March print and some 1.5 points short of the market consensus. This matched its steepest fall since last August but only made for a 2-month low. The measure now stands 4.4 points below its long-run average.

April's setback was largely due to industry where confidence dropped from minus 8.9 to minus 10.5, its worst outturn since July 2020. However, services (6.0 after 6.4), retail trade (minus 6.8 after minus 6.0) and construction (minus 6.0 after minus 5.6.) all posted falls too leaving the household sector (minus 14.7 after minus 14.9) to record the only gain.

Regionally, national sentiment improved in Germany (91.4 after 89.9) and Spain (104.3 after 102.0) but worsened sharply in France (95.9 after 100.7) and, to a lesser extent, in Italy (99.5 after 100.8). This left only Spain above the common 100 historic mean.

Inflationary expectations are favourable. Hence, expected selling prices edged down from 5.5 to 5.4 in manufacturing and declined more significantly from 15.2 to 14.1 in the key services area. The consumers sector (11.6 after 12.3) also saw a modest decrease to hit a 4-month trough.

Today's update is once again consistent with, at best, only sluggish growth of Eurozone real GDP. Momentum is probably picking up only slowly. Not that this will worry the ECB which will be more focused on inflation expectations where the latest results increase the likelihood of a cut in key interest rates in June. The April data put the region's RPI at minus 21 and the RPI-P at minus 25, both indices showing economic activity in general still lagging behind market forecasts.

Economic sentiment in April is expected to rise to 97.1 from March's 96.3 which remained well short of the 100 long-run average.

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.