The Euro-Zone Bloomberg retail PMI rose to 48.4 in April, stronger than expected and with this the second consecutive improvement. Germany, France and Italy all reported an improvement in confidence over the month, with companies reported easing input price pressures and a marked rise in sales versus a year ago. However, the latter reading may also be distorted by the later timing of Easter this year. The overall reading remains below the 50 point no change mark, thus indicating ongoing contraction in the retail sector.
Meanwhile, Euro-Zone March money supply growth slumped to 5.1% y/y from 5.9% y/y in the previous month. Expectations had been for a modest deceleration so data were much lower than anticipated. The counterparts show a private sector loans down 0.2% m/m and the annual growth rate down at just 3.2% y/y from 4.3% y/y in the previous months. Data may be impacted by the later timing of Easter this year, with cash holdings traditionally higher over the holiday period. Also, the annual rate of M3 still remains above the ECB’s reference value of 4.5%. Still, the drop in loans over the month and the slowing trend in credit and money supply growth will add to the arguments for further easing and the discussion of further non-standard policy tools at next week’s council meeting.