Rising demand boosts confidence for 10th month in row
Published 29/01/2010 | 05:00
European confidence in the economic outlook improved for a 10th month in January as reviving global demand helped stoke exports and bolstered earnings across the 16-nation euro region.
An index of executive and consumer sentiment increased to 95.7 from a revised 94.1 in December, the European Commission in Brussels said yesterday. European companies are stepping up output to meet export demand after governments around the globe committed trillions of dollars to stimulus measures. SAP AG, the world's biggest maker of business-management software, said yesterday it expected a rebound in sales in 2010.
Still, European Central Bank council member Axel Weber has forecast a "protracted" recovery.
"It's a further improvement but it doesn't suggest that sentiment will go through the roof," said Juergen Michels, chief euro-region economist at Citigroup in London.
"We'll probably see a further economic expansion, if at a slightly weaker pace than in the second half of 2009. This won't be a boom year, that's clear."
Signaling a revival in production, capacity utilisation rose for a second quarter, yesterday's report showed.
The index, compiled every three months, increased to 72.4 from 71. The gauge had fallen to a record low in the third quarter.
The global economy may expand 3.9pc this year instead of a previously projected 3.1pc, led by emerging economies, the International Monetary Fund said on Tuesday. The euro region may grow 1pc this year, the Washington-based organisation forecast.
In China, growth accelerated to the fastest since 2007 in the fourth quarter.
Indian exports rose to a 15-month high in December, bolstering growth in Asia's third-largest economy.
In the euro region, the recovery is losing some momentum as governments phase out stimulus measures and companies continue to cut jobs, eroding consumer demand.
Expansion in Europe's manufacturing and services industries unexpectedly weakened in January and German investor confidence declined.
"A recovery will be solid but nothing too exciting," said Rossa White, chief economist at Davy's said.