Eurozone gets strong economic report card

With the economy expanding strongly and confidence signalling solid momentum ahead, there’s only one subject the euro area is struggling with — inflation.

A string of data highlighted the robust and broadbased nature of the upswing in the 19-nation region that the European Central Bank is banking on to boost price growth that remains stubbornly below its goal. Economic confidence unexpectedly improved and two of the biggest economies in the bloc extended their solid growth runs.

“The upswing is stronger than expected — stronger than the ECB probably expected — but inflation is not there yet,” said Johannes Mayr, senior economist at Bayerische Landesbank in Munich. “It’s a difficult path to navigate. The ECB has to scale back while staying dovish, tighten without endangering the recovery.”

Sentiment

Euro-area economic sentiment rose to a decadehigh of 111.2 in July amid increased optimism in services and construction, according to the European Commission. Confidence in industry stayed at the highest in more than six years.

The report came after data showed France is enjoying its strongest continuous expansion since 2011 with output — driven by exports and investment — increasing 0.5 per cent in the April-June period. Business sentiment in the euro region’s second-largest economy has risen after Emmanuel Macron was elected president.

In Spain, the region’s number four, gross domestic product expanded 0.9 per cent, the fastest since 2015. The Austrian economy also grew 0.9 per cent in the second quarter.