Eurozone Economic Confidence Improves To 4-Month High
Eurozone economic confidence improved to a four-month high in July as sentiment in industrial and service sectors strengthened amid the relaxation of coronavirus containment measures, survey data showed Thursday.
Elsewhere, official data revealed that the unemployment rate increased in June although member countries started to phase out stringent steps taken to curb the spread of Covid-19.
The economic sentiment index climbed to 82.3 in July from 75.8 in the previous month, survey data from European Commission showed. The score was forecast to rise to 81.0.
Although sentiment strengthened further, it remained well-below the pre-virus levels and points to GDP contracting by 2 percent year-on-year at the start of the third quarter, Jason Tuvey, an economist at Capital Economics, said.
According to the survey, the recovery was driven by sharp confidence increases in industry, services, and retail trade. By contrast, confidence worsened slightly in construction and among consumers.
Industrial sentiment continued the previous two months' strong recovery, driven by marked improvements in managers' production expectations, appraisals of the adequacy of stocks of finished products, and the current level of overall order books.
The industrial confidence index came in at -16.2 versus -21.6 a month ago. The reading was forecast to rise to -17.0.
The services sentiment index rose to -26.1 from -35.5 in June. The sharp increase was driven by managers' more optimistic views on the past business situation, past demand, and expected demand.
The consumer confidence index fell to -15.0 in July, in line with flash estimate, from -14.7 a month ago.
A marked decrease in consumers' assessment of their households' past financial conditions was offset by moderate increases in expectations concerning households' financial conditions and their intentions to make major purchases.
The confidence among retailers improved to -15.3 from -19.4 a month ago. More positive assessment of the present and future business situation and the adequacy of the volume of stocks lifted the sentiment.
Meanwhile, the confidence index for construction fell to -12.6 from -11.6. The slight decrease was due to managers' more pessimistic employment expectations.
A more than expected improvement in economic confidence confirmed a V-shaped recovery, Peter Vanden Houte, an ING economist, said. But with the consumer still hesitant and the number of new Covid-19 infections picking up again, the growth pattern might turn out to be more patchy in the coming months, he noted.
Data from Eurostat showed that the euro area unemployment rate rose to 7.8 percent in June from 7.7 percent in May. The rate was forecast to remain unchanged at 7.7 percent.
The number of unemployed increased by 203,000 from the previous month to 12.685 million in June.
The unemployment rate among youth aged below 25 rose to 17 percent in June from 16.5 percent in May.
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