Eurozone sentiment looks slightly rosier in May

Eurozone economic sentiment has improved with May, as the European Comission's survey shows a rise from 88.6 to 89.4, beating analyst expectations of a rise to 89.0.

Overall consumer confidence came in line with expectations, improving from -22.3 to -21.9.

Services sentiment and industrial confidence managed to beat forecasts individually, as the former rose from -11.1 to -9.3 and the latter ticked up from -13.8 to -13.

Berenberg's Christian Schulz:

The crisis countries rebound as Eurozone economic confidence is rising again after two successive declines. The late winter wobbles around Italy and Cyprus, which had temporarily interrupted the confidence recovery that started last autumn, have faded, giving way to a resuming uptrend. The more domestic-oriented services and retail sectors improved most after recent setbacks, helped by less uncertainty and the hope that the worst of austerity in the crisis countries is over. But export-oriented manufacturing also stabilised, despite some clouds over the outlook from weaker Chinese growth and tougher competition from Japan.

Overall, the Eurozone was probably still in a mild recession in May. But with the Italian and Cypriot problems dealt with, the confidence recovery can resume and support the return to growth by Q3 2013. For the ECB, the stabilisation in confidence indicators, which was also reflected in the PMIs and the Ifo index, lowers the pressure to cut rates further.