Tags: eurozone | economy | confidence | europe

Confidence in Eurozone Economy Near a Four-year High

Monday, 30 Mar 2015 10:04 AM

Confidence in the eurozone's economy rose for a fourth straight month in March to its highest since July 2011, a European Commission survey showed on Monday, suggesting the weak euro and lower oil prices are spurring the recovery.

The European Commission's economic sentiment indicator rose by 1.6 points to 103.9, better than the 103.1 economists had forecast in a Reuters poll and building on a recovery that began in December. Business morale improved by 0.14 points to 0.23.

"The recovery is not only gaining momentum but broadening," said Frederik Ducrozet, senior eurozone economist at Credit Agricole. "The ECB's helping with the euro, you have oil stabilizing and there is no major deflation threat."

Italy showed the biggest jump in morale, increasing 2.4 points, followed by Germany, Spain and the Netherlands. Overall, eurozone households appeared much more optimistic.

Still, the eurozone's recovery is fragile and its economies are diverging. Economic morale in France, the eurozone's second-largest economy, rose just 0.4 points in March.

Despite the uncertainty surrounding Greece, the eurozone's economy finally looks to be leaving behind its crisis after two recessions since 2008, while the European Central Bank's money-printing program is increasing optimism.

The European Commission expects the eurozone's economy to grow 1.3 percent this year and 1.9 percent in 2016. That would lag the recovery in Britain and the United States but would offer a welcome sign that the bloc can avoid the economic stagnation and deflation many feared just a few months ago.

To combat low inflation, the European Central Bank has begun printing money to buy eurozone government bonds, a policy known as quantitative easing that will see it pump 60 billion euros ($65 billion) a month into the eurozone's economy.

That is weakening the euro against the dollar, helping eurozone exporters. A global oil glut is also making energy cheap.

In another sign that ECB policy is having a positive effect, the European Commission said in its survey that consumers' inflation expectations rose for a second straight month in March, and retailers and manufacturers again increased their forecasts for rising prices and demand.

Overall, the Commission noted "the marked improvement in industry confidence" as well as in services, retail trade and consumer confidence, which all pointed to an improvement in companies' plans to hire more staff.

"The improvement in euro area sentiment was fueled by brightening confidence among consumers, but confidence also improved among managers in retail trade, services, construction and, particularly, industry," the survey said.


© 2017 Thomson/Reuters. All rights reserved.

 
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Confidence in the eurozone's economy rose for a fourth straight month in March to its highest since July 2011, a European Commission survey showed on Monday, suggesting the weak euro and lower oil prices are spurring the recovery.
eurozone, economy, confidence, europe
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2015-04-30
Monday, 30 Mar 2015 10:04 AM
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