Euro-area consumer confidence gained ground in January, adding to signs that the euro-area economy may be stabilizing.
An index of household sentiment in the single-currency area rose to minus 20.6 from a revised minus 21.3 in December, the Brussels-based European Commission said in an initial estimate today. Economists had forecast a drop to minus 21.4, the median of 25 estimates in a Bloomberg survey showed.
“Concerns about the economic outlook, jobs, tightening fiscal policy in many countries and the sovereign risk crisis weighed down on overall euro-zone consumer confidence,” said Howard Archer, an economist at IHS Global Insight in London, in answer to an e-mail before the report. “This would not bode well for consumer spending in the early months of 2012 and would fuel concern that the euro zone will see further economic contraction in the first quarter after a likely drop” in the fourth quarter.
The euro extended gains after the data were released, trading at $1.3035 at 4:24 p.m. in Brussels, up 0.8 percent.
Euro-area finance ministers are meeting in Brussels today to discuss tougher budget-deficit rules as the region teeters on the brink of a recession and after Standard & Poor’s cut the credit rating of nine euro-area nations. Nevertheless, European Central Bank President Mario Draghi said last week that 2012 will be a “much better” year for the euro area, as governments implement austerity plans and as ECB cash injections to aid the region start taking effect.
The finance ministers’ meeting comes after EU foreign ministers imposed an embargo on oil imports from Iran, a move that may strain the economies of Greece, Spain and Italy, which accounted for about 68 percent of EU imports from Iran in 2010, commission data show.
Carrefour SA, the world’s second-largest retailer, said on Jan. 19 that 2011 profit was at the lower end of its reduced forecast range after fourth-quarter sales declined. Chief Financial Officer Pierre-Jean Sivignon said sales were affected by lower discretionary spending and economic conditions are likely to remain “challenging amid an uncertain environment.”
S&P’s rating downgrades on Jan. 13 stripped France and Austria of their AAA status. Germany was left with the euro-area’s only stable AAA rating.