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Eurozone Economic Sentiment Logs Record Improvement

eurozone july31 29jun20 lt

Eurozone economic sentiment improved at the strongest pace on record in June driven by the easing of lockdown measures taken to contain the spread of coronavirus, survey data published by the European Commission showed Monday.

The economic sentiment index climbed 8.2 points to 75.7 in June. However, the reading was below economists' forecast of 80.0.

The survey showed that the recovery was propelled by significant increases in confidence across all surveyed business sectors, namely industry, services, retail trade, construction and among consumers.

The rebound in sentiment has differed across sectors and the surveys point to a 5 percent annual fall in regional GDP in the second quarter, Liam Peach, an economist at Capital Economics, said.

Driven by another rise in production expectations, the industrial confidence advanced to -21.7 from -27.5 in the previous month, survey revealed. The reading was forecast to climb to -20.5.

The second rise in demand expectations helped the services confidence indicator to rise to -35.6 from -43.6 a month ago. The expected reading was -27.0.

Likewise, the consumer sentiment index improved to -14.7 in June, in line with flash estimate, from -18.8 in May, on the back of households' much improved expectations in respect of their financial situation, their intentions to make major purchases and the general economic situation.

Retail trade confidence bounced back 10.4 from rock bottom to -19.4, thanks to managers' drastically improved business expectations and views on the adequacy of the volume of stocks.

At the same time, construction confidence rebounded by 4.9 points to -12.4 in June, as managers' employment expectations recovered markedly and their assessments of the level of order books improved moderately.

The Employment Expectations Indicator improved sharply for the second month in a row by 12.7 points to 82.8 in June.

The survey showed that selling price expectations strengthened markedly in industry, services and retail trade, while remaining broadly flat in construction.

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