RTTNews - The week started off with some encouraging news from the largest Eurozone economy as results of a closely watched survey revealed that German business sentiment improved in May for the second consecutive month after reaching a record low in March.


A monthly survey conducted by the Munich-based Ifo Institute for Economic Research showed that German business confidence improved to 84.2 in May from 83.7 in April. However, the indicator stood below the expected reading of 85. Assessment of future situation continues to rise, pointing to a gradual stabilization of economic output at a low level, the Ifo said.

Commenting on the data, Chief Economist at Commerzbank, Jörg Krämer said the German economy probably contracted a little on the first quarter. But in case of considerable increase in order intake in the months ahead, this would suggest an end to the recession in the autumn. Commerzbank sees an anemic upward movement rather than a strong upswing once the recession ends. Such upward movement would not be able to avoid the growth in unemployment.

Germany's Federal Statistical Office said in a report that the total price-adjusted value of orders received by building construction and civil and underground engineering enterprises decreased 9.1% year-over-year in March after a 17.5% drop in the previous month.

Spanish producer prices declined 3.4% year-on-year in April, the official statistical agency INE reported. This came after a 2.5% slump in March. Producer prices embarked on a declining trend at the start of the year and this is biggest fall thus far.

The Statistical Office of the Republic of Slovenia announced that the seasonally adjusted economic sentiment indicator rose by three percentage points in May compared to the previous month. Separately, the agency reported that tourist arrivals declined 3% annually in April.

Statistics Austria announced that the manufacturing production decreased a working day adjusted 14.3% year-over-year in March, compared with a 14.2% fall in the previous month.

In other news, International Monetary Fund First Deputy Managing Director John Lipsky said the recent increase in oil prices indicates that the worst of the recession may be easing. Addressing a gathering of G8 energy ministers in Rome, Lipsky said global oil demand is expected to recover only gradually.

A report from the Paris-based Organization for Economic Cooperation and Development said gross domestic product in the OECD area dropped 2.1% sequentially in the first quarter, which was the largest decline since records began in 1960. In the fourth quarter of 2008, the economy had contracted 2%.

Rest of Europe

Bulgaria's jobless rate stood at 7.04% in April, up from 6.88% in March, the labor ministry said.

The Central Statistical Bureau of Latvia announced that the industrial producer prices dropped 2.6% year-over-year in April, in contrast to a 1.5% increase in the previous month.

The Czech Statistical Office said that the consumer confidence stood at 85.9 in May, up from 81.3 in April. The business confidence indicator decreased to 77.8 from 78.5.

Statistics Estonia announced that the average monthly gross wages and salaries dropped 1.5% year-over-year to 12,147 Kroons in the first quarter, compared to the 13,117 Kroons in the previous quarter. The agency also reported that the trade deficit stood at EEK 1.6 billion in March, revised from EEK 1.7 billion reported initially. In February, the trade deficit was EEK 1.05 billion.

The Hungarian Central Statistical Office said the retail sales volume dropped a working day adjusted 3.6% year-on-year in March, after a 3.3% fall in the preceding month. Economists expected sales to decline 3.5%.

In central bank action, Hungary's central bank kept its key interest rate unchanged for the fourth month in a row. The Magyar Nemzeti Bank held its base rate at 9.5%, in line with economists' expectations. The last change in interest rate was a 50 basis points cut to 9.5% in January.

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