Eurozone Economic Confidence At 17-Month High; Jobless At Record 12.1%

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The fourth consecutive improvement in Eurozone economic confidence took the index to a 17-month high in August, helped by pronounced gains in all sectors except construction.

Nonetheless, positive developments in the economy were not enough to bring down the unemployment rate from a record high. The jobless rate remained at 12.1 percent in July, official data showed Friday.

Meanwhile, inflation in the 17-nation currency bloc eased more-than-expected in August, owing to a fall in energy prices. Inflation has moved well below the European Central Bank's 2 percent inflation ceiling.

Economic confidence climbed to 95.2 from 92.5 in July, survey results published by European Commission showed. The reading was above the consensus 93.8.

Fueled by managers' much more positive assessment of the current level of overall order books and production expectations, confidence in industry rose to -7.9 in August from -10.6 in the prior month.

Similarly, confidence among service providers improved to -5.3 from -7.8. The improvement was driven by a sharp rise in managers' assessment of the past business situation and important improvements concerning past demand and demand expectations.

Consumer confidence continued its upward trend that started in December 2012. Sentiment rose to -15.6 in August, the most since mid-2011, from -17.4 in July, thanks to more optimistic views on the future general economic situation. The reading matched flash estimate.

Retailers' sentiment rose to -10.7 from -14 a month ago. Managers were particularly more confident about the future business situation. Also their assessments of the present business situation and their volume of stocks improved markedly.

However, confidence in construction weakened to -33.5 from -32.6 in July, resulting from managers' worsened assessment of both order books and employment expectations.

Another survey showed a better-than-expected strength in Eurozone business sentiment. The corresponding indicator climbed by 0.31 points to -0.21 in August. The index reading was expected to rise to -0.36.

The assessment of past production, the level of overall order books and production expectations improved sharply. Also the level of export order books and the stocks of finished products were appraised more positively, survey results showed.

According to figures released by Eurostat, the unemployment rate in Eurozone held steady at a historic high in July. The rate has been at 12.1 percent since April 2013.

Around 19.23 million people were unemployed in euro area in July. Compared with June, unemployment decreased by 15,000, but rose by 1.008 million from the previous year.

Among the EU member states, the lowest unemployment rate was recorded in Austria, followed by Germany and Luxembourg. The highest rates were in Greece and Spain.

In July, 3.50 million persons under the age of 25 were unemployed in the region. Compared with July 2012, their unemployment has decreased by 16,000. The youth unemployment rate was 24 percent.

In EU28, including Croatia, the overall unemployment rate was 11 percent, steady compared with June.

Inflation as per the harmonized index of consumer prices slowed to 1.3 percent in August, after staying unchanged at 1.6 percent in July, flash estimate from Eurostat revealed today. Economists had forecast inflation to ease to 1.4 percent.

The deceleration was driven mainly by a 0.4 percent fall in energy prices. Non-energy industrial goods prices, meanwhile, increased 0.3 percent annually. Costs of food, alcohol and tobacco were higher by 3.3 percent than in August 2012.

Core inflation, excluding energy, food, alcohol and tobacco, stayed unchanged at 1.1 percent in August. The outcome matched economists' forecast.

While a recovery seems to be underway, there is every reason for the central bank to remain in strongly accommodative mode for the foreseeable future, Jennifer McKeown, senior European economist at Capital Economics said.

The recent Purchasing Managers' survey showed sharpest growth in Eurozone private sector in more than two years in August.

The Eurozone economy shrugged off its longest recession on record in the second quarter of 2013. Gross domestic product advanced 0.3 percent, which was the strongest growth rate since the first quarter of 2011.

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