Economic confidence in the euro area improved more than economists forecast to a 27-month high in November, the latest indication that the bloc’s recovery is gaining traction.
An index of executive and consumer sentiment increased to 98.5 from 97.7 in October, the European Commission in Brussels said today. That’s above the median estimate of 98 in a Bloomberg News survey of 31 economists and is the highest reading since August 2011.
Euro-area economic growth cooled in the third quarter and the European Central Bank this month cut its main refinancing rate to a record-low 0.25 percent, based in part on its forecast for “continued, albeit modest, growth in the second half of the year.” ECB President Mario Draghi said on Nov. 7 that a “gradual strengthening of demand for exports” should contribute to growth.
The improvement in sentiment supports “hopes that the euro zone can gradually establish economic recovery despite GDP growth relapsing to just 0.1 percent” in the third quarter, said Howard Archer, an economist at IHS Global Insight in London. “Generally improving business sentiment outweighed the first dip in consumer confidence for a year.”
The sub-index on industrial sentiment advanced to minus 3.9 in November from minus 5 in October, the commission said. That’s the highest in more than two years. Gauges of confidence in the services and retail industries also gained this month, while consumer sentiment weakened.
Economists estimate that euro-zone gross domestic product will increase 0.4 percent in the fourth quarter after the 0.1 percent gain in the three months through September, according to a Bloomberg survey published on Nov. 18. They project a full-year contraction of 0.4 percent.
The euro was higher against the U.S. dollar after the confidence data, trading at $1.3579 at 10:45 a.m. in London, up 0.1 percent on the day.
European new car sales have risen for two consecutive months for the first time since 2011, helped by a cash-for-clunkers program in Spain. Sales advanced 4.6 percent from a year earlier in October, propelled by increases of 14 percent at Renault SA and 6.2 percent at General Motors Co.
With the euro-region recovery remaining uneven, some companies are continuing to cut jobs. German unemployment rose for a fourth month in November, data showed today, and the euro-area jobless rate has risen to a record 12.2 percent.
The decline in consumer confidence this month “largely reflected reduced optimism about the economic outlook and a modest rise in job concerns,” Archer said.
PSA Peugeot Citroen, Europe’s second-largest carmaker, is looking at removing capacity from its Mulhouse plant in France, spokesman Pierre-Olivier Salmon said on Nov. 21. The closure of Spanish white-goods manufacturer Fagor will lead to about 10,000 job losses, Cinco Dias reported on Oct. 31.