The weakening of consumer demand particularly affected the services sector, where the business‑sentiment index fell 3.2 points month‑over‑month to 0.9 points. Industry and construction showed greater resilience – the monthly decline in ratings was small in both sectors.
Since the start of the war in the Middle East these sectors have not shown a deterioration in business sentiment, which may be due to earlier actions by firms that increase their resilience to shocks.
This may also suggest that the impact of the current geopolitical situation on the euro‑zone economy will not be drastic.
Money supply M3 in March rose 3.2% year‑over‑year compared to 3.0% year‑over‑year in February, slightly stronger than expected.
The dynamics of credit for the private sector in March were 3.5% year‑over‑year versus 3.3% year‑over‑year in February. Household credit grew 3.0% year‑over‑year, unchanged month‑over‑month. In
the euro zone, further gradual acceleration of credit activity is expected, indicating improved demand for financing and potentially supporting economic activity.
On the other hand, the growth of non‑financial corporate deposits accelerated to 4.6% year‑over‑year versus 3.9% year‑over‑year in February, which in turn indicates a potentially cautious approach to investment that, in the current conditions of high uncertainty, may be postponed to "safer" times.
Deepening the goods trade deficit – USA
The goods trade deficit in March deepened to $87.9 bn (sa) from $83.5 bn in February. Exports rose 2.5% month‑over‑month (16.0% year‑over‑year), mainly driven by industrial raw material and capital goods deliveries. Imports increased 3.3% month‑over‑month (-12.9% year‑over‑year), with a clear rise in consumer goods, capital goods and passenger vehicles.
The data still show the impact of higher tariffs and rising commodity prices. In the "industrial materials" group, export value increased 4.9% month‑over‑month, and imports 3.2% month‑over‑month – the rise is due to higher prices, and the stronger rebound of exports than imports reflects the USA’s position as a fuel producer.
USA: +18% rise in defence orders
Durable goods orders in March rose 0.8% month‑over‑month (sa) versus a 1.2% month‑over‑month decline in February. The result was higher than expected (0.5%). The main source of surprise was the 18.3% month‑over‑month rise in defence orders.
Increase in new house starts in the USA
New house starts in March rose to 1.50 m (sa), reaching the highest level in two years. The March increase was 10.8% month‑over‑month after a 9% month‑over‑month decline in February. In the single‑family house segment, growth was 9.7% month‑over‑month, and in multi‑family construction 9.6% month‑over‑month. At the same time, building permits fell 10.8% month‑over‑month, signalling a weakening of activity in the coming months.
The rise in construction activity is transitional – worsening sentiment, higher material costs (especially energy) and rising mortgage rates limit the sector’s growth prospects.
China PMI RatingDog index up
CHN: The RatingDog PMI for processing in April rose decisively stronger than expected to 52.2 points from 50.8 points. The result was the best since December 2020, and the production sub‑index was the highest since June 2024. The improvement was driven by a rise in new orders, which recorded the second best month in almost five years.
Price indices (both production factors and finished goods) rose to the highest levels in over four years.
The official PMI for processing in April remained largely unchanged (50.3 points versus 50.4 points in March), but was slightly better than expected. Production and employment sub‑indices rose.
The decline covered the new orders index, while the export orders sub‑index rose above the neutral 50‑point level for the first time since April 2024. The differences between the official index and RatingDog may stem from the fact that the latter better represents export firms, generally in better condition. Price sub‑indices remained high but fell slightly compared to March.
The official index for non‑processing sectors fell to 49.4 points from 50.1 points, signalling that while industry remains relatively sound, services are already worse. Both reports suggest that China’s economic activity remains high despite the oil shock.
National EVENTS
Economic sentiment in April continued to deteriorate, though less so than in the euro zone. The ESI index fell to 100.2 points from 101 points in March and 101.4 points in February (before the Iran war), remaining above the 2‑hour average. In April, the biggest deterioration was seen among consumers (‑2.9 points month‑over‑month to ‑4.9 points) and the services sector (‑2 points month‑over‑month to ‑4.5 points).
The situation in construction and retail remains relatively stable, while sentiment in industry improved – the index rose 1.2 points month‑over‑month to ‑13.7 points, reaching the highest level since the start of the energy crisis. Stable business conditions, despite new global disruptions, result from companies starting a new investment cycle driven by EU funds.
Additionally, after recent crises, firms have become more resilient, reducing the economy’s sensitivity to shocks.
