Eurozone economic confidence hits pre-crisis high

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Economic confidence in the eurozone has risen to its highest level since July 2007, the month before what many people consider the beginning of the global financial crisis, the latest in a series of even stronger than expected indicators of confidence in the region.

The European Commission’s economic sentiment indicator rose to 111.9 in August, compared to consensus forecasts of 111.3. Last month’s figure was also revised up from 111.2 to 111.3.

The positivity was shared by businesses across different sectors, with sub-indices for confidence in industrial and services businesses both rising ahead of forecasts.

The eurozone-wide figures follow similarly positive readings from both official and unofficial measures of confidence in various individual countries. Italy’s official economic confidence measure, for example, hit a near-10 year high earlier this week, while the Institute for Economic Research (Ifo’s) closely-watched survey of confidence in Germany set yet another new record last week.

Surveys such as IHS Markit’s Purchasing Managers’ Indices have also outperformed expectations in recent months, leading many analysts – including at ratings agency Moody’s today – to upgrade their growth forecasts.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, described the figures as “bullish”. Mr Vistesen said “the headline confidence index has been overstating GDP growth in recent quarters”, but the extent of the increase still points to “clear upside risks to growth”.