Euro-Area Economic Confidence Increases More Than ForecastAngeline Benoit
Euro-area economic confidence increased more than economists forecast in December, buoying up policy makers as they grapple with the legacy of the currency bloc’s longest recession.
An index of executive and consumer sentiment rose to 100 from a revised 98.4 in November, the European Commission in Brussels said today. That beats the median estimate of 99.1 in a Bloomberg News survey of 24 economists, and is the highest reading since July 2011.
“The economic recovery is gradually gaining momentum,” London-based Barclays Plc analyst Apolline Menut said by telephone. “The pace of growth will remain moderate in 2014 as the euro area lacks clear growth drivers and several downside risks remain, such as bank lending, while unemployment won’t improve significantly in the short term.”
Today’s confidence report comes just before the European Central Bank wraps up its January monetary-policy meeting, at which the Governing Council will keep the main refinancing rate at a record-low 0.25 percent, according to all 51 economists in another Bloomberg survey.
The Frankfurt-based central bank sees “no immediate need to act” further on rates thanks to “encouraging signs” that the euro area’s crisis is easing, President Mario Draghi said on Dec. 28 in Der Spiegel. The ECB estimates that the economy will expand 1.1 percent this year after contracting 0.4 percent in 2013.
The euro extended gains against the dollar after the data were released, trading at $1.3614 at 11:53 a.m. in Brussels, up 0.3 percent on the day. The Stoxx Europe 600 Index was up 0.3 percent to 330.81.
The data raise “the probability that the ECB will keep its powder dry at today’s policy meeting,” Martin van Vliet, an economist at ING Bank in Amsterdam, wrote in a note. “This confirms that the economic recovery gathered some pace in the final three months of last year, which will surely be welcomed by the ECB’s Governing Council.”
The commission’s industrial confidence index rose to minus 3.4 from minus 3.9 in November, today’s report showed, missing analysts’ estimates.
Daimler AG’s Mercedes-Benz, the world’s third-biggest maker of luxury cars, said last month that its employees would work more hours in 2014 to meet demand for new models after new-car sales in Europe rose in November for a third month.
The gauge of consumer confidence improved to minus 13.6 from minus 15.4 in November, the commission said. That follows data yesterday that showed retail sales in the euro area increased 1.4 percent in November from a month earlier.
Still, the nascent recovery hasn’t led to job creation, with the unemployment rate in the euro area stuck at 12.1 percent since April. European Aeronautic, Defence & Space Co. plans to cut 5,800 jobs in Germany, France, Spain and the U.K., the company said on Dec. 9.
The commission’s gauge of employment expectations in the manufacturing industry rose to minus 4.7 in December from minus 6.3, today’s report showed.