Eurozone confidence at highest level in more than two years
Published 30/07/2010 | 05:00
BUSINESS and consumer confidence in the eurozone economic outlook rose to the highest level in more than two years in July.
It is the latest in a series of surprisingly good data, including Wednesday's bank survey which showed a sharp rise in demand for credit from firms.
The EU Commission index of executive and consumer sentiment increased to 101.3 from 99 in June. Other figures showed the number of people out of work in Germany fell a seasonally adjusted 20,000 to 3.21 million, the lowest since November 2008.
"Things are clearly picking up," said Dan McLauighlin, chief economist at Bank of Ireland. "Markets are now a bit more concerned about the US economy."
Peter Loescher, chief executive officer of Siemens AG, said yesterday he was hopeful of a "clear stabilisation and a recovery of the global economy".
The euro rose to its best levels against the dollar since EU governments announced a rescue package on May 10. "Markets have been focused on the issue of sovereign debt, but it seems to have had no impact on real people or economic activity," Mr McLaughlin said.
Better exports, especially from Germany, have fed back into general confidence, with Europe's largest economy possibly growing by more than 1pc in the second quarter.
But this makes the euro area vulnerable if the world recovery weakens. "These indicators challenge the idea of a eurozone slowdown taking place in the second half, but until I get evidence of foreign demand picking up again, I can't change that view," Jacques Cailloux, chief European economist at Royal Bank of Scotland in London, told Bloomberg.
"I don't feel that the economy is recovering very quickly," said Charles Edelstenne, CEO at Dassault Aviation. "But I think my experience from the past shows that it's always the moment when we least expect it that things take off."
The survey also showed manufacturers' capacity utilisation rose to 77.4pc in the third quarter, while order books and expectations for export orders also increased.
In Italy, business sentiment also improved in July. But some executives remain sceptical about the strength of the economic recovery.
"Too many uncertainties remain, such as growth in China, the stability of the euro, the development of financial markets and high government deficits," said Hans-Juergen Thaus, co-CEO of Krones, the world's largest maker of bottling and packaging equipment. (Additional reporting Bloomberg)