Economic morale in the eurozone improved for the first time in almost a year in November, but industry's reluctance to invest next year bodes poorly for a quick recovery from recession.
Sentiment towards the bloc's economy rose 1.4 points to 85.7, beating forecasts and ending an eight-month run of declines, the European Commission's monthly business and consumer survey showed on Thursday, with Germany and France gaining strongly.
The Commission's survey of industry found expectations of a 1 percent fall in real investment in 2013 compared to this year, however, casting doubt on European policymakers' predictions that growth will return next year.
"The economic outlook for the eurozone remains pretty dreadful," said Jonathan Loynes, chief European economist at Capital Economics in London.
The eurozone fell into a recession in July-September, its second since 2009, as French resilience failed to make up for a slump across Europe and the three-year-old debt crisis dragged on Germany, Europe's economic engine.
The debt problems that emerged in Greece in late 2009 following the global financial crisis and have since spread through the bloc continue to reverberate around the globe and hold back a lasting recovery.
The Commission sees 0.1 percent growth in the eurozone economy next year, but the OECD and many international economists see the recession continuing in 2013.
"We expect the euro area to remain in recession in 2013," Citigroup said in a research note this week, predicting more interest rate cuts by the European Central Bank to try to stimulate the economy, which generates a fifth of global output.
Consumer confidence also fell in the eurozone in November, the survey showed, which is bad news because the bloc relies on shoppers to drive around half of its economic output.
Economic sentiment in November was still better than the decline expected by economists polled by Reuters, and the Commission said confidence in industry increased significantly by the first time since February, helped by orders.
That may be a sign that the eurozone, while struggling at home with the debt crisis, may be benefiting abroad as the U.S. and Chinese economies regain some strength.
Separately, the Commission's business climate indicator, which points to the phase of the economic cycle, increased by 0.42 points to -1.19, and showed an improved mood across much of the economy, including order books and output expectations.
© 2015 Thomson/Reuters. All rights reserved.