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Eurozone economic sentiment on the up

Its ‘economic sentiment indicator’ climbed in November to 100.8 from 100.7 in the previous month. These figures are relative to the long term average if 100.

The main driver was an improvement in the sub-index for manufacturing with the retail sector also a factor and the underlying weakness of the euro helping create optimism among exporters.

‘ECB action pushed forward’

According to Moody’s Analytics economist Zach Witton, the improvement lessens the chances of the European Central Bank expanding its monetary stimulus programme before the end of this year.

“November’s rise in economic sentiment suggests the euro zone’s economy will grow, albeit at a weak pace, in the final quarter of this year. The improvement in sentiment should reduce the pressure on the European Central Bank to announce additional monetary policy easing in December. Yet the composite manufacturing and services purchasing managers’ index suggests growth will weaken in the fourth quarter.

Witton also sounded a note of caution however. “Consumers’ finances remain under pressure from the elevated unemployment rate and high household debt in a number of eurozone countries including Spain and the Netherlands,” he said.

 

Part of the Bonhill Group.