Eurozone businesses were beginning to regain momentum in the weeks leading up to the Trump administration’s early April tariff announcement, with early signs of a recovery in the industrial sector, according to a European Central Bank (ECB) survey released Tuesday.
The survey, conducted between March 26 and April 2, covered 79 leading non-financial firms across the euro area. It found that while uncertainty remained elevated, companies reported increasing demand for machinery and equipment, and emerging signs of improvement in the construction sector.
However, the survey’s findings predate the market turbulence triggered by the U.S. tariff threats. Since then, the economic outlook has likely worsened. The ECB last week cautioned that downside risks to growth had risen sharply, warning that escalating trade tensions could dampen economic performance across the bloc.
Despite the looming threats, firms reported a modestly improved employment outlook during the survey period. Nonetheless, many emphasized a continued focus on efficiency over workforce expansion.
At the time, companies were adopting a cautious stance on the potential impact of tariffs, with no significant reassessments of major investment plans, the ECB noted.
The survey offers a snapshot of tentative optimism just before geopolitical developments cast new shadows over Europe’s economic trajectory.
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