European confidence in the economic outlook increased twice as much as economists forecast in August, adding to signs the region is emerging from the deepest recession in more than six decades.
An index of executive and consumer sentiment in the 16 nations that use the euro rose to 80.6, the highest since October, from 76 in July, the European Commission in Brussels said today.
Economists had predicted a two-point increase to 78, according to the median of 29 estimates in a Bloomberg survey.
The euro-area economy barely contracted in the second quarter after its two largest members, Germany and France, unexpectedly returned to growth as improving global trade boosted demand for exports and government stimulus programs rekindled domestic spending.
European Central Bank policy makers including President Jean-Claude Trichet have warned the recovery may face obstacles such as rising unemployment.
“We are in recovery mode,” said Julian Callow, chief European economist at Barclays Capital in London who predicts the euro-area economy will expand 0.6 per cent in the third quarter.
“Unemployment will remain a drag unfortunately because overall activity is still sharply down and the labour market hasn’t adjusted sufficiently, but the really good news is that the services sector seems to be rebounding, which should boost consumer confidence.”
While Europe’s economy shrank 0.1 per cent in the three months through June, German services and French manufacturing unexpectedly expanded in
August, with business, investor and consumer confidence in Europe’s largest economy also jumping more than economists forecast.
Reuters