Euro-Area Economic Confidence Increases More Than Expected
An index of executive and consumer sentiment rose to 102.4 from 101.2 in February, the European Commission in Brussels said today. That beat the median estimate in a Bloomberg News survey of 31 economists and is the highest reading since July 2011.
ECB President Mario Draghi said on March 25 that the Frankfurt-based central bank’s accommodative monetary policy should be increasingly felt throughout the euro-zone economy as disruptions in the financial system wane. The Governing Council will keep its benchmark interest rate at a record low of 0.25 percent next week, according to a separate Bloomberg survey.
An improvement “marginally strengthens the case for no action next week,” Frederik Ducrozet, an economist at Credit Agricole CIB in Paris, said before today’s report. “Only lower consumer prices in March could now provide the ECB with a justification to cut rates.”
The ECB aims to keep inflation just below 2 percent and has cited the strength of the euro as contributing to subdued prices. The European Union’s statistics agency will publish initial March inflation figures on March 31.
German inflation slowed to 0.9 percent in March from 1 percent in February, in line with economists’ estimates, while consumer prices in Spain unexpectedly declined 0.2 percent this month, data from the countries’ statistics offices showed today.
Industrial confidence rose to minus 3.3 from minus 3.5 in February, according to today’s Eurostat report. That follows data by Markit Economics Ltd. showing that a gauge of manufacturing output fell to a three-month low in March.
Bayerische Motoren Werke AG (BMW) executives said last week that they see potential in Europe for new models amid a gradual economic recovery. European car sales rose 7.6 percent in February, the sixth consecutive monthly gain.
International investors are returning, including to nations that received bailouts in the depths of the crisis. U.S. exchange-traded funds show net inflows of 604 million euros ($831 million) into Spain this year, marking an increase of 68 percent, according to data compiled by Bloomberg.
Neighboring Portugal attracted 17 million euros, a 12-fold gain this year. Money has also flowed into Greece and Ireland, which saw investment increasing 77 percent and 28 percent, respectively.
Confidence in the services industry increased to 4.2 from 3.3 in February, according to today’s report. Consumer sentiment improved to minus 9.3 from minus 12.7.
Still, the euro area is struggling to shake off the legacy of a debt crisis that sparked a record-long recession and pushed the unemployment rate to an all-time high.
Draghi said this week that while he expects the ECB’s “accommodative stance to support a gradual closing of the output gap in the coming years,” the central bank is determined to act if “downside risks” appear.
“We stand ready to take additional monetary policy measures that ensure our mandate is fulfilled,” he said. “In other words, we will do what is needed to maintain price stability.”
To contact the reporter on this story: Angeline Benoit in Madrid at firstname.lastname@example.org