Eurozone economic confidence strongest in 8 monthsStaff Writer | September 30, 2016
Eurozone economic sentiment rebounded strongly to an eight-month high in September from a five-month low in the previous month.
Europe The Eurozone economy has shrugged off the Brexit
The economic sentiment index climbed to 104.9 from 103.5 in August. Economists had forecast an unchanged reading.
The latest reading was the strongest since January, when the score was 105.1.
Figures show that the Eurozone economy has shrugged off the Brexit vote induced confidence blow, though the region is still far away from a significant GDP acceleration, Peter Vanden Houte at ING Bank said.
The European Central Bank will feel no urgency to act on the back of low inflation and apart from small tweaks in the quantitative easing program, any imminent changes in monetary policy are likely, the economist added.
Elsewhere, Stephen Brown, an economist at Capital Economics, said the ECB is likely o announce an extension of its Asset Purchase Programme in December, if not before.
Improved euro area sentiment resulted from sharply increasing industry confidence, as well as stronger retail trade and construction confidence.
Among components of the overall sentiment indicator, the industrial confidence index rose sharply to -1.7 from -4.3, marking the strongest reading in at least the past 12 months. Economists had forecast a score of -4.2.
The rally in industry confidence owed to managers' sharply improved assessments of the current level of overall order books, which neutralized the hefty losses reported in August.
The consumer confidence index rose to -8.2 from -8.5, in line with the initial estimate released on September 22. The improvement was the first in four months.
Consumer confidence edged up as more optimistic savings expectations and views on the future general economic situation almost outweighed rising concerns about future unemployment.
The services confidence measure rose marginally to 10 from 9.9. Broadly flat developments in services sentiment resulted from largely unchanged views on all components of the indicator, namely demand expectations, past demand and the past business situation.
Sentiment also improved in the construction sector. The corresponding index rose to -15 from -15.8.
The business climate indicator climbed sharply by 0.42 points to 0.45 in September. Economists had predicted a score of 0.05.
The retail trade sentiment came in at 0.5 points versus -1.1 in the prior month. Retail trade confidence booked a solid increase, fueled by more upbeat views on the present and the expected business situation.
The ESI rose in all of the five largest euro-area economies, most strongly so in the Netherlands and Germany, followed by France, Spain and Italy.
Data published by the Federal Labor Agency today showed an unexpected increase in German unemployment in September.
The number of people out of work increased by 1,000 to 2.68 million, confounding expectations for a decrease of 5,000.
The jobless rate remained unchanged at a seasonally adjusted 6.1 percent in September, the lowest since the German reunification.
Owing to the refugee factor - given rising numbers being officially granted asylum, completing qualification measures, and then looking for work, IHS Markit economist Timo Klein nonetheless expects headline unemployment to start rising gradually during the coming months. ■