Sunday 25 February 2018

Confidence at highest level for two years

Simone Meier

EUROPEAN confidence in the economic outlook improved to the highest in more than two years and German unemployment plunged amid signs the euro-area recovery is strengthening even as Greece's fiscal crisis spreads across the region.

An index of executive and consumer sentiment in the 16 euro nations rose to 100.6 in April from a revised 97.9 in March, the European Commission in Brussels said.

The biggest improvement was in Germany, the euro area's biggest economy. Outside the eurozone, there was a small increase in the confidence indicator for Britain. No data is available for Ireland.

Separately, German figures showed unemployment falling 68,000 to 3.29 million in April, almost seven times more than economists had forecast.

The decline in the jobless number lowered the country's unemployment rate to 7.8pc from 8pc in March. But analysts warn that confidence and recovery could wane unless the Greek crisis is contained.

"The improvement in sentiment contrasts sharply with growing concern that the Greek crisis may be spreading," said Martin van Vliet, an economist at ING Group in Amsterdam.

"Second-quarter economic growth may turn out to be quite flattering, but with the Greek debt crisis showing signs of spreading, recovery prospects thereafter look increasingly uncertain," he said.

The commission's survey was conducted before the April 11 agreement by euro-area nations to offer the support mechanism for Greece.

An index of confidence in Greece fell to the lowest in 11 months, the commission report showed, while a gauge for Portugal slipped after improving for five straight months.

Sentiment in Spain improved for a seventh month.

The improvement is being led by manufacturers, where capacity utilisation rose to 75.5pc in the second quarter from 72.3pc in the previous three months, the commission said -- the highest figure since the fourth quarter of 2008. Companies also grew more optimistic about the order outlook and employment prospects.

But consumers are growing less optimistic that a recovery will feed into the jobs market.

A gauge measuring households' expectations of euro-region unemployment over the next 12 months fell to 36 from 46 in March. (Bloomberg)

Irish Independent

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