31 Oct, 2017
Eurozone Economic Sentiment at Highest Since 2001
Eurozone economic sentiment rose in October for the fifth consecutive month to reach its highest level since the start of 2001, showing almost no impact from the Catalan crisis, according to European Commission data.
The near 17-year high is the highest reading since January 2001 when the bursting of the dot-com bubble had begun to hit confidence.
The monthly survey showed that sentiment in the Eurozone rose more than forecast on average by economists polled by Reuters to 114.0 points in October from 113.1 the previous month. Confidence grew markedly in Germany, the bloc’s largest economy, and in Italy, while it declined in France.
Despite the uncertainties surrounding the Catalan crisis, sentiment improved also in Spain, with marked rises in the industry and services sectors. But confidence dropped in the country’s retail sector and among consumers.
Data shows that «political tensions continue to have little effect on economic sentiment this year», Bert Colijn, senior economist at ING said. The EU statistics office Eurostat will release preliminary estimates today on the bloc’s GDP in the third quarter.
Forecasts by economists polled by Reuters put the expected growth figure at 0.5pc. If the 0.5pc forecast were confirmed by actual data that would be a slight slowdown from the 0.6pc growth recorded in the second quarter.
But economists remain confident growth will accelerate again in the last three months of the year. «While the available hard data imply that Eurozone GDP growth slowed a little in Q3, we think that it will pick up again in Q4," economic research firm Capital Economics said in a note.
In October, optimism in the Eurozone grew in all surveyed economic sectors, jumping to 16.2 points from 15.4 in September in services, the largest sector in the Eurozone.
Confidence in industry grew to 7.9 from 6.7 and the retail sector saw a rise of sentiment to 5.5 from 3.0.
Consumers shared the positive mood, with optimism rising to the highest level in 16 years.
The positive reading for the 19-country bloc sharing the euro was only partly clouded by a drop in inflation expectations among manufacturers to 8.6 from 10.5 in September.
That could potentially curb output in coming months. Manufacturing production expectations dipped slightly, while export order books rose only marginally.
Inflation expectations among consumers continued instead to increase, to 14.7 from 14.2 in September.
Read also: In a Half Way Through 2017, Morgan Analysts Boost Euro Forecast at $1.18 by 2017 Year-end, Top 3 Economic predictions for 2017, The Long View: How Will The Global Economic Order Change by 2050?
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