Economic sentiment in the Eurozone countries has hit its “highest level in more than 10 years” last month, the European Commission informed. The positive mood was driven by rising confidence among industrial firms and in the service sector. The Commission’s Economic Sentiment Indicator rose to 111.9 from 111.3 in July, marking the highest level since summer 2007. The measures aggregate business and consumer confidence.
Among the Eurozone members, Italy had the highest rise in economic sentiment followed by France and Spain, hinting that the signs of recovery are spreading. However, the positive mood subsided a bit in Germany and the Netherlands, the traditional powerhouses. The rise in confidence underpins expectations that the single currency zone will retain its solid growth rate in the second half of the year despite a stronger euro, and will be driven by domestic demand. These results also drive economists’ expectations that the European Central Bank (ECB) will soon begin to wind down a huge stimulus program following on the Federal Reserve in the US.
“Robust survey indicators in euro area countries suggest that growth should accelerate through the rest of the year, while the consumer confidence indicator close to a 16-year high bodes well for the consumer-driven recovery”, commented Madhavi Bokil, a Vice-President at Moody’s Investors Service. Moody has also upgraded its growth forecasts for the Eurozone to 2.1% in 2017 and 1.9% in 2018. The European executive also said that industrial companies in the 19-country euro currency bloc upgraded their employment plans last month and their selling-price-expectations went up as well. However, consumers’ price expectations, remained “virtually unchanged,” the Commission said.