Europe Consumer Confidence Improved in August, Initial Estimate Indicates
European consumer confidence unexpectedly improved in August after economic growth accelerated to the fastest pace in four years in the second quarter.
An index of sentiment in the 16-nation euro area rose to minus 12 from minus 14 in July, the Brussels-based European Commission said today in an initial estimate. Economists forecast that the index would remain unchanged this month, the median of 16 predictions in a Bloomberg News survey showed. The commission will publish its monthly report on economic confidence, which includes the consumer gauge, on Aug. 30.
European households may remain reluctant to boost spending as governments cut budget deficits and companies continue to eliminate jobs. Unemployment held at 10 percent in June, the highest in almost 12 years, and growth in services and manufacturing industries slowed in August.
“With the exception of Germany, where the economic situation is more robust than elsewhere, consumers are still feeling the crisis,” said Sylvain Broyer, chief euro-region economist at Natixis in Frankfurt. “Household spending will only add very little to an economic expansion going forward.”
The euro-region economy is showing some signs of cooling after expanding 1 percent in the three months through June. German investor confidence dropped to a 16-month low in August and European Central Bank President Jean-Claude Trichet said this month that the second half of 2010 will probably be “much less buoyant” than the second quarter.
Rotterdam-based Unilever, the world’s second-largest consumer-goods maker, said on Aug. 5 that sales in Western Europe fell 2.2 percent in the second quarter. Beiersdorf AG, the German maker of Nivea skin creams, said the same day that Europe remains a “challenging region” for the consumer business.
“Growth momentum is softening and will probably weaken more markedly going forward,” said Tullia Bucco, an economist at UniCredit Global Research in Milan. Still, “fears of a double-dip recession are exaggerated.”
To contact the reporter on this story: Simone Meier in Zurich at smeier@bloomberg.net
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