Eurozone Economic Confidence At 10-Month High
October 28 2016 - 2:40AM
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Eurozone economic confidence rose more-than-expected in October
to its highest level thus far this year, as the region weathered
the uncertainty from the 'Brexit' vote.
The economic sentiment index improved to 106.3 from 104.9 in
September, survey data from the European Commission showed Friday.
This was the highest level since December 2015, when the reading
was 106.6. The expected score was 104.9.
The October/September increases in sentiment suggests that any
hit to Eurozone consumers and businesses from the UK's Brexit vote
in June was limited and has waned, IHS Global Insight economist
Howard Archer said.
However, the economist said it was highly possible that the
'Brexit' vote will impact more significantly on Eurozone confidence
and activity in 2017 as the U.K. triggers Article 50.
The survey should provide the European Central Bank with some
comfort that the recovery has continued, Jennifer McKeown, an
economist at Capital Economics, said.
But with inflation pressures still very weak, the economist
suspects that the bank will still extend its asset purchases by six
months at the current pace in December.
Improved Eurozone sentiment resulted from marked increases in
confidence in the industry, services and construction sectors,
while sentiment in retail trade and among consumers remained
broadly flat.
The industrial confidence indicator climbed to -0.6 from -1.8,
mainly driven by a marked improvement in managers' production
expectations and better assessments of overall order books and
inventories.
The confidence index for services rose to 12 from 10 in
September, led by managers' significantly brighter assessment of
past demand and the past business situation.
The consumer confidence index improved slightly to -8 as
initially estimated from -8.2 in the previous month. The
improvement resulted from a much more negative assessment of future
unemployment, which was offset by more positive views on
households' future financial situation.
Meanwhile, the retailers' confidence index held steady at 0.4 in
October as a marked improvement in managers' views on the expected
business situation, offset by a strong deterioration in the
assessment of the present business situation.
The confidence index for construction rose to -14.3 from -15.6
in the previous month. The marked rise in construction confidence
was fueled by upward revisions in managers' employment
expectations, while their order book assessment remained broadly
stable.
The business climate index rose marginally to 0.55 in October
from 0.44 in September. Managers' production expectations and their
assessments of export order books improved sharply.
Also their assessments of the past production, the level of
overall order books and the stocks of finished products improved in
October.
Third quarter GDP data released on Friday by member countries of
euro area signaled a mixed picture. The French economy recovered
after contracting in the second quarter, while growth in Spain
eased marginally.
Spain's economic growth slowed to 0.7 percent from 0.8 percent
in the third quarter. A similar slower growth was last logged in
the final three months of 2014. Nonetheless, the economy expanded
for the twelfth consecutive quarter.
France's gross domestic product expanded 0.2 percent
sequentially, reversing a 0.1 percent fall a quarter ago. But the
pace of growth was slightly weaker than the expected 0.3
percent.
Eurozone GDP data for the third quarter is due on October
31.
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