Economic sentiment and the business climate in the 12-nation euro zone improved for the first time this year in June while the annual inflation rate picked up speed, data showed today.
The EU executive's economic sentiment indicator for the euro zone rose slightly by 0.2 points to 96.3, following an almost uninterrupted decline since October last year.
The improvement in sentiment and increase in inflation is likely to be welcomed by the European Central Bank, which is under pressure to cut rates to stimulate growth.
“The small gain in Euro zone economic confidence and the slight acceleration in Euro zone inflation from 1.9 per cent to 2.1 per cent will probably vindicate the ECB's wait and see strategy,” said David Brown, chief European economistat Bear Stearns International.
The improvement in economic sentiment was mainly due to a stabilisation of confidence in industry, but the commission was cautious in declaring that sentiment was now on the rebound.
“The coming months will make clear whether this is the beginning of a turnaround or merely an interruption of a continuing downward path,” the commission said.
A separate business climate indicator, also published by the commission, improved for the first time this year, by 0.08 points to minus 0.29 points, ending the decline seen in the last seven months.
The May business climate was unrevised at minus 0.37 points and economists had expected June's business climate to worsen to minus 0.4.
“The positive development of the BCI in June is explained by the improvement of industry managers' assessment of production in the months ahead and of stocks of finished products,” the commission said.
Although economic sentiment improved, the EU's statistics agency estimated the euro zone inflation rate picked up to 2.1 per cent in June from May's 1.9 per cent, slightly above expectations, for an increase to 2.0 per cent.
Eurostat's flash estimate for the month does not include a monthly calculation nor any full data.