Euro zone economic sentiment and business climate continued to decline in April amid steady inflation, pointing to slower output growth in the first half of the year, according to data released today.
The first estimate from the European Statistics office showed annual consumer prices in the 12-nation euro zone rose 2.1 per cent in April, unchanged from March, and as expected in a Reuters poll of 19 economists.
The European Central Bank, which aims to keep inflation below but close to 2.0 per cent, expects inflation to decline over the medium term.
But the economic sentiment indicator, published by the European Commission, fell to 96.5 points in April from a revised 97.5 in March, well below expectations of a fall to 97.2 and continuing an almost uninterrupted slide since November 2004.
"Since peaking in October 2004, the indicator has fallen by 6.6 points in the European Union and by five points in the euro area, indicating a considerable slowing of output growth in the first half of 2005," the commission said in a statement.
The decline in confidence was strongest in the industrial and services sectors on concern about demand and order books although consumer confidence remained fairly stable, the commission said.
The industrial confidence indicator fell in all major member states except Italy, the commission said, and was now below its long-term average for the first time since the end of 2003.
Confidence in the services sectors has been on the decline since the start of 2005 with the largest falls in April in France Italy and Britain, but also Germany.
Consumer confidence edged 1 point higher in the euro zone to minus 13 with the biggest gains - 3 points - in Germany, where latest data showed a decline in the unemployment rate from 12 percent to 11.8 per cent in April.
But consumers felt less confident in France, where the indicator dropped 3 points to minus 17 as unemployment data released earlier today showed the jobless rates inching 0.1 point higher to 10.2 per cent, a five-year high.
A separate business climate indicator published by the Commission showed a further, and stronger than expected decline in April, to minus 0.28 from a revised minus 0.09 in March, continuing a decline since the summer of 2004.
The European Commission has revised down its 2005 growth forecast to 1.6 per cent, but expects growth to pick up in the latter part of the year.