Improved Business Momentum in Euro Zone

FRANKFURT (Reuters) – Euro zone firms reported improved business momentum leading up to the Trump administration’s early April tariff announcement, mainly due to a recovery in the industrial sector, according to an ECB survey.

Businesses indicated high uncertainty but observed signs of recovering demand for machinery and equipment, along with indications that construction activity was improving, as shown in a survey of 79 leading non-financial companies.

The outlook has likely worsened since the survey was conducted between March 26 and April 2, before financial market turmoil following U.S. tariff announcements.

Last week, the European Central Bank warned that downside risks to economic growth have significantly increased and that the trade war would hinder economic growth.

Despite the ongoing uncertainties, firms noted a slight improvement in the employment outlook; however, most of their focus remained on efficiency rather than hiring more staff.

Until the end of March, firms maintained a wait-and-see approach regarding tariffs and were not reassessing major investments, according to the ECB.