Eurozone businesses stay upbeat despite profit squeeze — ECB survey

According to the latest European Central Bank (ECB) survey, European companies remain confident about future growth prospects, even as trade tensions weigh on profitability. Although corporate earnings have declined, particularly among small- and medium-sized firms, businesses continue to maintain robust hiring levels, waiting for the economy to recover. 

The ECB's quarterly report revealed that 8% of European firms experienced turnover growth in the past three months, and 23% anticipate better performance in the next quarter. However, profit margins continue to shrink across the bloc, highlighting ongoing pressures.

Trade disputes have impacted eurozone companies broadly, though US exporters and manufacturers face the strongest headwinds. Nearly one-third of surveyed firms reported supply chain disruptions, prompting many to diversify their vendor base or shift their focus toward EU markets.

While long-term inflation expectations remained stable, businesses lowered their short-term price growth forecasts (from 2.9% to 2.5%), indicating caution about short-term operating conditions, the bank commented.