During the first two months of 2016, volatile markets led to widespread decline in confidence indicators. Several EC euro area confidence numbers are likely to stabilize in the coming months, but this might not happen immediately, according to Societe Generale. However, concerns regarding global market volatility and global economy have alleviated recently. This was evident in the flash euro area PMIs of March that rebounded slightly, suggesting a stronger picture of the economy.
However, rebound in the euro area sentiment indicators tends to lag the PMIs. Admittedly, the flash estimate of consumer confidence indicator showed additional drop in February figure. There is a likelihood of a similar pattern to take place in other components of the headline economic sentiment figure with the overall impact likely to be weaker.
“We forecast 102.7 in March from 103.8 the previous month”, says Societe Generale.
The numbers are expected to rebound going forward as data releases indicate certain underlying health in the economy, added Societe Generale. This resilience is likely to carry forward to the second quarter of 2016.
