Euro-area consumer confidence increased more than economists estimated in July, adding to signs the 17-nation currency bloc is emerging from a record-long recession.
An index of household confidence in the euro zone improved to minus 17.4 from minus 18.8 in June, the European Commission in Brussels said today. Economists had forecast an increase to minus 18.3, according to the median of 27 estimates in a Bloomberg News survey. The gauge has improved for eight straight months.
The euro-area economy, which has contracted for six quarters, probably stagnated in the three months through June and will return to growth this quarter, according to a separate Bloomberg survey of economists. The International Monetary Fund forecasts the bloc’s economy to shrink 0.6 percent this year.
European Central Bank President Mario Draghi earlier this month took what he called an “unprecedented” step and told investors that interest rates in the euro area would stay low as the economy struggles, lending is weak and inflation pressures remain subdued. The ECB’s benchmark rate is at a record low 0.5 percent.
Draghi said euro-area domestic demand later this year and in 2014 “should be supported by the accommodative monetary policy stance as well as the recent gains in real income owing to generally lower inflation.” Consumer price growth has been below the ECB’s 2 percent ceiling for five months.
Consumer confidence improved despite a record unemployment rate of 12.2 percent. Retail sales increased 1 percent in May from a month earlier.
Carrefour SA, France’s biggest retailer, said on July 18 that stronger sales in Latin America helped cushion a drop in Europe during the second quarter, while revenue at its French hypermarkets was stabilizing. The company doesn’t expect the economic climate to improve in 2013.
The Brussels-based commission is scheduled to publish the final numbers for June consumer confidence and the wider indicator of euro-area economic confidence on July 30.