Eurozone economic confidence rises
Economic confidence in the euro area increased more than economists forecast in September, adding to signs the single-currency bloc’s recovery is gaining momentum.
An index of executive and consumer sentiment rose for a fifth month to 96.9 from a revised 95.3 in August, the European Commission in Brussels said yesterday. That beat the median estimate of 96 in a Bloomberg survey of 26 economists.
Signs of resurgence in the euro-area economy since it returned to growth in the second quarter after an 18-month contraction have boosted equities, with the Stoxx Europe 600 Index up more than 4% in the last two months.
Yet Europe continues to struggle with the legacy of the debt crisis now in its fourth year, including falling industrial production and a jobless rate at a record 12.1%.
“With eurozone economic sentiment continuing to turn up, the risk of a near-term relapse in economic activity is clearly dwindling,” said Martin van Vliet, an economist at ING Bank NV in Amsterdam.
“However, with ongoing private-sector deleveraging in many eurozone countries, and the ongoing deleveraging by governments (albeit at a slowing pace), the pace of recovery remains well below ‘escape velocity.’”
Confidence improved across the economic spectrum in September, with the index of industrial sentiment up to minus 6.7 from minus 7.8 in August and the services gauge rising to minus 3.3 from minus 5.2. Confidence in the retail sector increased to minus 7 from minus 10.6.
Sentiment in the financial-services industry, which wasn’t factored into the economic confidence number, jumped to 11.3 from 5.2, “driven by a striking increase in managers’ demand expectations, as well as improving assessments of past demand and the past business situation,” the commission said in yesterday’s report.
“Measures of confidence and surveys of production have given some support to the view that euro-area economic activity should continue its slow recovery in the current quarter, despite weak production data for July,” European Central Bank president Mario Draghi said on Sept 23.
“However, unemployment in the euro area remains far too high, and the recovery will need to be firmly established.”
Economists in a separate Bloomberg survey see economic growth slowing to 0.2% in the third quarter after a 0.3% expansion in the three months through June.
Analysts forecast the jobless rate won’t drop below 12% through 2015. — Bloomberg