In August, economic sentiment in the eurozone recorded its highest level in over 10 years. This was led by rising confidence among consumers as well as companies in service and industrial sectors.
The Economic Sentiment Indicator, which tracks business and consumer confidence in Europe, jumped to 111.9 from 111.3 in the previous month. This records the highest level since the summer of 2007. Economists are predicting steady, continuous growth in the coming year.
Italy recorded the sharpest rise in economic sentiment among the Eurozone economies, followed by France and Spain, a signal that the recovery is spreading throughout the continent. The increase in confidence further promotes expectations that the eurozone will remain on a solid growth path in the second half of the year, despite a stronger euro. In addition, the European Central Bank is set to begin the reduction of its stimulus program, mimicking the actions of the U.S. Federal Reserve last week. ECB President Mario Draghi could signal for a gradual decrease as early as the bank’s next policy meeting, set on September 7th.
“Robust confidence in eurozone countries suggests that growth will accelerate through the rest of the year” said Keith Knutsson of Integrale Advisors.
The European Economic Commission said industrial companies in the euro currency bloc increased employment plans and selling-price-expectations. On the other hand, consumers’ price expectations were not affected. An improving economic outlook also prompted Moody’s to lift its growth forecasts for the eurozone to 2.1% in 2017 and 1.9% in 2018.