Eurozone consumer confidence for March remained unchanged at -14.5, matching preliminary figures. In comparison, the prior figure stood at -13.6.
Economic confidence decreased to 95.2, lower than the expected 97.0, while the previous figure was 96.3. Industrial confidence slightly missed expectations at -10.6, though the prior figure was revised from -11.4 to -11.0. Services confidence fell to 2.4, below the expected 6.7, and the prior was revised from 6.2 to 5.1.
Drop In Economic Sentiment
This decline marks the lowest economic sentiment since December last year, primarily due to a drop in services sector confidence. Consumer inflation expectations rose to 24.4 in March, the highest since November 2022.
What we’ve just seen in these figures is a clear indication that enthusiasm across several parts of the Eurozone economy has taken a knock over the past month. Consumer confidence has steadied, but that still leaves it firmly in the red, showing households haven’t shaken off the cautious mood they’ve been in. That reading of -14.5 simply means more people are feeling pessimistic than optimistic. It’s stuck where it was at the start of March, rather than recovering to where it sat in February — which was a touch better at -13.6.
Now, it’s the broader economic confidence number that’s taken more of a downturn. It’s not immaterial, falling more than expected to 95.2, the weakest since the tail end of last year. That kind of move doesn’t happen without a nudge from across sectors, and this time the services sector did most of the dragging. The previous expectations were meaningfully higher at 97.0, but disappointment here suggests firms are reacting to softer demand or worsening forward-looking indicators.
Keep in mind that services play a large part in the Eurozone’s output. When sentiment dips heavily there — as it just did — it gives us a decent barometer of what may follow. It’s not just some minor miss either: the drop to 2.4, against expectations of 6.7, is quite a plunge. Even after revisions to the earlier number, it’s clear sentiment here is wavering.
Rising Inflation Expectations
On the industrial side, things didn’t improve either, but the adjustment to the prior reading shows we probably had our expectations set a touch pessimistically last month. Still, we’re sitting with a measure that is well into negative territory, telling us producers remain under pressure. And while this wasn’t a sharp miss, it’s not nothing either — these levels imply headwinds in new orders or inventory build-up that will take time to unwind.
Perhaps more noteworthy is the sharp upward movement in consumer inflation expectations. A jump to 24.4 might not catch eyes at first, but when you realise it’s the highest reading since late 2022, it’s harder to dismiss. It reveals a population that’s growing increasingly worried about prices accelerating again. Whether it’s food, fuel, or services — what’s clear is that higher price expectations are settling in. We should pay attention to this, especially given the tendency for such expectations to quickly influence wage demands and spending behaviour. That can put pressure on rate projections, and those are precisely the items we depend on when pricing forward moves.
What all of this tells us is that sentiment is cooling just as inflation pressures resurface. For those of us working in structured exposure, the shifts here aren’t to be ignored. One way or another, this isn’t the kind of balance central banks aim for. And when sentiment data clashes with inflation indicators like that, we don’t get to sit back and wait. The price of assumptions moves quickly when minds change about growth and price stability.
We would not be surprised if this altered near-term expectations around rate paths. That kind of environment rewards close calibration of entry points. And in the short run, the more actionable takeaway is to keep durations nimble and temper bets on smooth macro normalisation. The data is already telling us that scenarios are diverging a little — and wading in without accounting for that skew rarely pays.
So, we monitor closely. Both policy clues and second-tier data surprises now carry more weight than they did just one quarter ago.
