According to a survey by the European Central Bank (ECB), companies in the euro area have been rather cautious about their expectations for the rest of the year. From the point of view of companies, the outlook for economic activity continues to be characterized by increased uncertainty, the ECB announced in Frankfurt on Friday.
Expectations for a further increase in activity in the second half of the year are subdued. Mixed signals are coming from global demand and uncertainty in energy prices is continuing. In addition, there would be nervousness due to the recent problems of some banks. The contacts between central bank representatives and 61 companies from the 20-country community took place between 30 March and 13 April.
The interlocutors at the companies had also assumed that sales prices would not rise as sharply as they did recently. The rate of increase is weakening as expected at the beginning of the year, the ECB survey said. To a large extent, companies attributed this to the stabilization of non-wage-related costs. Supply and demand for many goods have been balancing out again since last summer.
In industry, however, prices remain at a historically high level. More labour-intensive service providers expected continued sharp price increases due to a sharp rise in wages. Wage growth is the main concern of companies in terms of costs. Overall, companies expected wage growth of five percent in the current year.