Euro-Area Sentiment Brightens in Sign Economy Reached Trough
Euro-Area Confidence Brightens in Sign Economy Reached Trough
(Bloomberg) --
Economic confidence in the euro area improved more than forecast this month, adding to signs the region might be through the worst of its recent slump.
The European Commission survey is the latest to suggest growth prospects in the 19-nation region have at least stopped deteriorating after the European Central Bank unleashed new monetary support in September. Sentiment improved in industry, services, retail and among consumers in November, with forward-looking sub-components faring particularly well.
The euro-area economy expanded a mere 0.2% in the third quarter as manufacturing suffered from weaker global momentum, the U.S.-China trade war and geopolitical uncertainty.
While domestic demand has held up reasonably well and Germany, the bloc’s largest economy, narrowly avoided a technical recession, policy makers still see risks to the outlook on the downside and have called for fiscal stimulus.
| Measure | November | Survey | October |
|---|---|---|---|
| Economic Confidence | 101.3 | 101.0 | 100.8 |
| Industry | -9.2 | -9.1 | -9.5 |
| Services | 9.3 | 8.8 | 9.0 |
| Consumer | -7.2 | n/a | -7.6 |
| Retail | -0.2 | n/a | -0.9 |
| Construction | 3.1 | n/a | 4.4 |
| Business climate | -0.23 | -0.14 | -0.20 |
According to the Commission survey, industry managers were more optimistic on production expectations and their stocks of finished products. But in a sign not all is good, they were still downbeat on export demand, and grew more pessimistic about hiring and their ability to raise prices.
For services firms, the outlook for demand improved to a five-month high and employment expectations were relatively steady.
Bloomberg economist Maeva Cousin pointed to better leading indicators in arguing growth has accelerated. The euro-area economy expanded at an annualized rate of 0.1% in the three months to November, she said.
IHS Markit said last week that while private-sector activity in France and Germany picked up in November, momentum in the rest of the region showed concerning signs of weakening.
With the economy still facing huge uncertainty, ECB President Christine Lagarde urged a new policy mix in her first major speech this month, arguing public investment should be stepped up to ease the burden on the central bank.
“We have a unique possibility to respond to a changing and challenging world by investing in our future,” she said. “All of this would be a game changer, not just for our own stability and prosperity, but for that of the global economy, too.”
To contact the reporter on this story: Yuko Takeo in Frankfurt at ytakeo2@bloomberg.net
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow, Fergal O'Brien
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