Euro-Area Confidence Improves Amid Optimism on Vaccine Rollout

Economic confidence in the euro area improved in February, as consumers and businesses grew more optimistic that vaccine rollouts will spark a recovery this year.

A European Commission sentiment index increased to 93.4, the highest level in almost a year. Gauges for industry, services, and consumer sentiment all improved, though confidence in the retail and financial services sectors declined.

Euro-Area Confidence Improves Amid Optimism on Vaccine Rollout

Companies and households are looking past the first quarter, which has been blighted by slow vaccinations and extended lockdowns, to a rebound from the spring. Europe is also set for a boost from its recovery fund later in the year, though that program is smaller and more drawn out than in the U.S.

The confidence survey highlights how the crisis is hitting some sectors and countries more strongly than others. While manufacturers have to a large part remained open and found ways to cope with the latest lockdowns, consumer-facing services such as non-essential shops and restaurants have been shut in large parts of the region.

Manufacturers boosted their production expectations, while retailers expressed concern over the adequacy of their stocks. Among large economies, optimism picked up in Germany, France and Italy, but worsened in Spain and the Netherlands.

Analysts surveyed by Bloomberg predict the euro-area economy will shrink 0.9% in January to March, then expand by more than 2% in each of the following two quarters.

Separate surveys published early on Thursday showed German and Italian consumer confidence improving and sentiment little changed in France.

©2021 Bloomberg L.P.

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