Confidence in eurozone economy rises: survey
Businesses and consumers in the eurozone turned sharply more optimistic in June about their economic prospects, an EU survey showed on Thursday, offering a small ray of brightness to the debt crisis gloom.
Amid a high level of uncertainty in Europe and on global markets about the direction of interest rates, growth and unemployment, spirits lifted in the eurozone even though debt clouds still hover over some countries.
A monthly index of business and consumer confidence compiled by the European Commission rose by 1.8 points from the level in May to 91.3 points.
The index for all 27 countries in the European Union rose by 1.8 points to 92.6 points.
"The good news is that the eurozone economy seems to be bottoming out," said Global Economics economist Peter Vanden Houte.
"That said, the recovery remains fragile. In that regard the recent increase in bond yields and the financial unrest in China might tip the economy back into recession."
The European Commission noted that confidence had also risen in the five main economies among the 17 which form the eurozone.
The biggest increase, of 2.5 points, was registered in Spain which is still struggling to overcome its economic and debt problems and particularly high youth unemployment.
The index for Italy rose by 1.7 points, for France which is also overhung by strains in its economy, by 1.3 points, in Germany the European Union powerhouse by 1.1 points and in the Netherlands by 0.9 points.
This reflected a brighter view of prospects by business leaders in all sectors of the eurozone economy except the services sector, and also a sharp improvement in the way households see their financial future.
The index now stands at the highest level since May 2012.
Consumer confidence showed the biggest rise, jumping by 3.1 points to show the seventh monthly increase in a row.
However, business confidence in the services sector was almost flat, slipping by 0.3 points.
At Capital Economics in London, European economist Ben May said that while the surveys "certainly made encouraging reading" it was too soon to say that the eurozone was about to recover from its crisis.
The data suggested that eurozone gross domestic product may have begun to stabilise after shrinking for six months in a row.
But this had happened before, only to go into reverse, he said.
"The eurozone economy remains fragile and there is no guarantee that the recent pick-up in sentiment will prompt the eurozone as a whole to exit recession in the near term," he said.
As markets digested the news, Germany registered a surprise fall in unemployment, dropping to 6.8 percent in June in seasonally-adjusted terms.
This meant that the rate was the same as in May after that figure was revised slightly downwards.
In Italy, optimism was spurred on by a report from the national business association that said the eurozone's third largest economy had "hit bottom" and is on the slow path to growth.
Confindustria said Italy will start to recover in the fourth quarter and return to growth in 2014. It sharply revised its gross domestic product forecast, however, cutting it to 0.5 percent from 0.6 percent.
In France, meanwhile, the INSEE statistics institute said household confidence this month fell to a new record low as worries increased about joblessness.
INSEE's composite index for household confidence dropped by one point to 78 in June, dropping below the July 2008 level, at the depths of the global financial crisis.
© 2013 AFP