April 22 (Bloomberg) -- Euro-area consumer confidence unexpectedly increased to the highest in six and a half years in April, after the unemployment rate retreated from a record and the single currency bloc’s recovery gained momentum.
An index of household confidence in the euro zone rose to minus 8.7, the highest since October 2007, from minus 9.3 in March, the European Commission in Brussels said in a preliminary report today. That beat the median forecast of minus 9.3 in a Bloomberg News survey of 24 economists.
“Consumer confidence is on a rising trend,” said Christoph Weil, an analyst at Commerzbank AG in Frankfurt. “There is a strong correlation between the unemployment rate and consumer sentiment, so improvements in the labor market are boosting confidence, helping the economic recovery gain momentum.”
The jobless rate held at 11.9 percent in February, down from a record of 12 percent recorded last year. European Central Bank President Mario Draghi said on April 10 that while unemployment “remains high,” the labor markets “have shown first signs of improvement.”
The euro extended gains against the dollar after today’s data were released, trading at $1.3815 at 4:06 p.m. in Brussels, up 0.2 percent on the day. The Stoxx Europe 600 Index was up 1.4 percent to 337.02.
Consumers’ improved outlook is reflected in European car sales, which advanced for a seventh month in March. “There is a big recovery coming in Europe,” Carlos Ghosn, chief executive officer of Renault SA, said on April 15. Retail sales also increased in February for a second month. The ECB forecasts euro-zone growth of 1.2 percent this year, accelerating to 1.8 percent in 2016.
“The further rise in euro-zone consumer confidence to a 78-month high in April makes it a little easier for the ECB delaying any decision on whether or not to go for further stimulus,” said Howard Archer, chief European and U.K. economist at IHS Global Insight in London.
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