Eurozone indicators to be released this week will show that business confidence stabilised in May as oil prices and the euro both eased, economists said. All of the major countries in the 12-member single currency area release May business confidence data over the week and the figures will be closely watched after April data pointed to another economic slowdown in the second quarter. The main focus of interest will be the German Ifo and ZEW surveys, which are expected to show confidence steadying following the declines of April.
French and Belgian confidence readings are expected to recover slightly after even steeper falls, but Italy's business confidence reading is likely to continue sliding.
The Ifo business climate index fell a total of 3.1 points in the three months to April, when it reached 93.3, its weakest level for more than a year and a half.
Economists expect it to hold at this level in May.
"We see a good chance of a stabilisation in the German Ifo. Oil prices have fallen by 9.0 percent from their April average and the euro has depreciated modestly further. Both factors should improve the outlook for corporate profitability," said Holger Schmieding of Bank of America.
The ZEW index slumped to positive 20.1 in April from positive 36.3 in March and it, too, is expected to remain unchanged in May.
Such readings will not point to an acceleration in economic activity but will at least mean that growth is not deteriorating further.
Unchanged readings in the Ifo and ZEW will point to continuing stagnation in the eurozone industrial sector, said James Ashley and Nick Matthews of Barclays Capital.
The French business climate indicator is expected to recover slightly after the shock fall recorded in May, which took it to 18-month lows, and the bellwether Belgian National Bank indicator is also likely to rebound partially.
Overall, the strong first-quarter GDP figure is likely to be little more than a blip in an otherwise insipid trend, BNP Paribas economists said.
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