The euro zone index of consumer sentiment in May confirmed a relative improvement this month, drawing a less negative private consumption this quarter. This would indicate a rate of contraction in both the first and the second quarter of about -0.5% (-0.7% in the fourth quarter). Retail sales data, to be published today, are expected to slowdown its worsening. They would also point to a contraction rate of about -0.5%.
Against this, analysts at BNP Paribas added in an investor report that the poor outcome of unemployment draws a more negative trend. Yet, here too there's a silver line.
“It should b
e noted, however, that the rising unemployment rate supported higher growth rates. In this sense, in the second quarter, a rising unemployment rate of 11.5% would mean a private consumption of 0.3% versus 0.4% drawn for the first quarter. Since this component of GDP has a higher correlation with confidence and/or sales, it is to be expected that private consumption behaves in a less negative way in the first half of the year.”