Euro-Area Consumer Confidence Rises to Highest in 7 Months

Euro-area consumer confidence increased to the highest in seven months in February amid signs the economy may be gaining strength after slipping into a recession last year.

An index of household confidence in the currency bloc rose to minus 23.6 from minus 23.9 in January, the European Commission in Brussels said in an initial estimate today. It was the third straight gain after sentiment reached a 3 1/2-year low in November. Economists had forecast a December reading of minus 23.2, according to the median of 24 estimates in a Bloomberg News survey.

European Central Bank President Mario Draghi said this month that confidence in the euro area has stabilized and the ECB sees a gradual recovery beginning later this year, though the situation is “fragile.” Investor confidence in Germany, Europe’s largest economy, jumped to the highest in almost three years this month, data showed yesterday.

Still, with euro-area unemployment at a record 11.7 percent, the ECB forecasts that the bloc’s economy will shrink 0.3 percent this year after a 0.5 percent contraction in 2012. Gross domestic product fell 0.6 percent in the fourth quarter, the worst performance since 2009.

“Even if some signs of stabilization are emerging, it looks all but sure that domestic demand is not going to provide any significant growth contribution this year,” said Peter Vanden Houte, an economist at ING Group NV in Brussels. “We actually expect household consumption to contract by 0.2 percent this year.”

Economic Growth

The appreciation of the euro, which has gained about 8 percent against the U.S. dollar in the past six months, could also put a drag on economic growth by hampering exports.

The euro rose as high as $1.3711 on Feb. 1, the strongest since Nov. 14, 2011. The European currency traded at $1.3384 at 4:29 p.m. in Brussels, down less than 0.1 percent on the day.

The commission is scheduled to publish the final numbers for February consumer confidence and the wider indicator of euro-area economic confidence on Feb. 27.

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