Eurozone economic confidence climbed to a 9-month high in February by the virtue of its fourth consecutive monthly improvement, boosting expectations of a trend reversal in the bloc. Nevertheless, inconclusive Italian election remains a potential risk.
The economic sentiment index came in at 91.1, up from a revised 89.5 in the prior month and was also above the consensus forecast of 89.9, the results of a survey by the European Commission showed Wednesday.
However, Howard Archer, chief European economist at IHS Global Insight, said concerns persist that the improved sentiment is yet to feed through to materially boost Eurozone economic activity.
Moreover, there is the very risk that the inconclusive Italian general election will lead to a marked renewed intensification of Eurozone sovereign debt tensions.
Continuing the broad upward trend observed since November, the index measuring industry confidence improved to -11.2 in February from -13.8 in the prior month.
Also the services confidence continued the upward trend it has been following since October. The index rose to -5.4 from -7.7 in January. The marked increase in February was the result of sharp improvement in managers' assessment of the past business situation, and to a lesser extent by the assessment of past demand.
The consumer confidence index rose to -23.6 from -23.9 in the previous month. Consumers were more positive about the future general economic situation, but more negative about their savings expectations over the next 12 months.
Meanwhile, the index measuring confidence in construction fell to -29.8 from -28.5 in the previous month. The confidence index for the retail trade sector decreased marginally by -0.5 to -16 in February, driven by worsened assessment of the present business situation and business expectations.
In a separate communique, the commission said the Business Climate Indicator increased by 0.36 points to -0.73 in February. The reading was better than the expected reading of a minus 1.02.
The assessment of current order books, production expectations and past production improved significantly. At the same time, the assessment of the adequacy of stocks of finished products remained virtually unchanged in February.
As the region struggles with a deep financial crisis, the European Commission forecast the 17-nation bloc to contract for the second straight year in 2013. The eurozone is expected to shrink 0.3 percent this year.
by RTT Staff Writer
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