Economic sentiment in eurozone improves

Economic sentiment in the eurozone surged to a post-crisis record in December and German industrial orders pointed to a busy final quarter for factories in Europe’s powerhouse with the government expecting the upswing to carry into 2017.

The overall strong data, released yesterday by the European Commission in Brussels and the Economy Ministry in Berlin, suggested vibrant business activity in the eurozone at the turn of the year despite increased political uncertainties.

It matched strong data this week from purchasing managers and signs of an uptick in inflation.

“The eurozone has started the year on a positive note,” ING economist Bert Colijn said, saying Italy’s referendum last month and the subsequent concerns about its banking sector had not dented confidence in the currency bloc as a whole.

“Improving order books, strong employment expectations and strengthening assessments of production in recent months outweigh increased political volatility for the moment.”

The European Commission’s monthly survey showed economic sentiment at 107.8 in December from 106.6 in November. That was the strongest level since March 2011 and well above the long-term average of 100.

The EC’s business climate indicator rose to its highest level since June 2011 above all forecasts in a Reuters poll.

Together with the strong figures from Wednesday’s PMI, the data suggest “the eurozone economy enjoyed a much-needed growth spurt at the end of 2016”, said Stephen Brown at Capital Economics.

Reuters