PwC’s barometer dipped by 4 points in March to reach +33, reflecting a slight but widespread drop in confidence across Europe and Luxembourg.
Despite clear signs of recovery, as confirmed by the Luxembourg Central Bank’s quarterly GDP growth forecasts standing at 2.9% for 2014, Luxembourg’s industrial production outlook has contracted to some extent in relation to the previous month. Indeed, although the business climate has improved in the country, it has failed to jump-start consumer confidence. According to Statec, household expectations on individual financial prospects and on the economy in general point to a general feeling of cautiousness. This can also be seen in the labour market, with unemployment remaining stubbornly above 7%.
In Europe, investors appear to be unmoved by the positive developments recorded in the European private sector, driven in part by the return to growth of French businesses. This hesitant mood can be explained by recent events in Ukraine. In Germany, for instance, businesses fear that a conflict with Russia would damage trade relationships between the two countries. This has been compounded by recent data published by Eurostat showing a 1.2% rise in hourly labour costs across the EU in the fourth quarter of 2013.
PwC Luxembourg's Monthly Barometer was created in cooperation with AGEFI Luxembourg as a simple and practical tool designed to provide a monthly snapshot of the economic climate in Luxembourg.
The barometer combines the results of Statec's short-term indicator on industrial output in Luxembourg with data published by ZEW, a German research institute, on the economic perceptions of analysts and investors regarding the euro area.
The graph below shows trends in the barometer over the past six years.