President of the European Central Bank (ECB) Christine Lagarde stated on Monday that borrowing costs may have reached their peak, but will remain high for as long as it takes to curb inflation. She noted that the current economic landscape presents a nuanced picture, marked by varying developments in different sectors. Notably, the business-related services sector has displayed a promising upturn, with all key components showing improvement, particularly activity expectations which have rebounded after a recent downturn. In contrast, the manufacturing industry has maintained a stable business sentiment for two consecutive months, driven by mixed trends across components; optimism about employment is counterbalanced by caution regarding demand and concerns about stock and order books. Unfortunately, the trade sector has deteriorated due to reduced demand expectations, a decrease in intentions to place orders with suppliers, and consistent but stagnant employment expectations, leading to an overall contraction. The building industry, already in decline in the previous month, witnessed the most significant loss of confidence, with all components contributing to the negative trend, except for demand expectations, which surprisingly remained stable. The smoothed synthetic curve, influenced by these recent setbacks, continues its downward trajectory, reflecting the ongoing challenges in the broader economic landscape.
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