Euro-Area Economic Confidence Surges to Highest in a Decade – 27 April, 2017
Euro-area economic confidence jumped to the highest in almost a decade this month, a testament to a continued improvement that may soon prompt a policy shift at the European Central Bank.
The index of executive and consumer sentiment surged to 109.6 in April from a revised 108 in March, the European Commission in Brussels said on Thursday. That’s the strongest since August 2007 and compares with a median estimate of 108.2 in a Bloomberg survey of economists.
The report may sway the ECB Governing Council’s assessment of the 19-nation economy as it prepares to announce its policy decision later on Thursday. While no changes to interest rates or asset purchases are expected, most respondents in a Bloomberg survey say an improved outlook will allow President Mario Draghi to revise forward guidance as early as June, sooner than previously anticipated.
The economy appears to be on increasingly strong footing, and political risks have diminished somewhat after the first round of France’s presidential elections. Manufacturing sentiment in the country, the region’s second-largest economy, rose to a six-year high in April. In Germany, business confidence surged. Data next week is expected to show the euro-area economy grew 0.4 percent in the three months through March.
Confidence measures are “unbelievably upbeat, but this optimism is excessive,” said Andreas Scheuerle, an economist at Dekabank in Frankfurt. “The direction that the sentiment indicators are showing is right. But the promises what growth will be can’t be fulfilled.”
Thursday’s Commission report showed improvements across all sectors. In industry, managers were more upbeat about the current level of order books, while a pick-up in consumer confidence was fueled by greater optimism on jobs, the economy and household finances. Gauges for employment prospects saw significant increases in construction, retail trade, industry and services.
Source: Bloomberg