LONDON (AFX) - Euro zone economic figures due out this week are expected to show a favourable lack of inflationary pressure alongside a limited improvement in industrial output, economists said. Data on the inflation front is expected to be the more convincing - with a a possible downward revision in the final German figures for May likely to be followed by a soft reading in France.
"The French numbers will be the most important. I expect a 0.2 pct month-on-month fall which should mean a big fall in year-on-year terms for the euro zone average," said Sharda Dean, economist at Merrill Lynch. Improvements in industrial output are expected to be patchy with France and Germany expected to show modest rises although Italy may have been held back by the general strike in April.
"In the externally orientated sector the situation looks a bit brighter - last week's new orders data was stronger than had been expected, while the OECD indicator has been perkier over the last couple of months. We expect (German) industrial production to respond," economists at Dresdner Kleinwort Benson said.
But while the first quarter saw industrial output stabilise, especially in France, "it is possible that April sees a pause in the recovery, before a strong rise in May," economists at CSFB wrote. Elsewhere, German retail sales are expected to disappoint. Investors are becoming used to continued downbeat domestic sector news from Germany and the latest instalment is likely to be the retail sales, economists said.