Leadership

German optimism drives Eurozone economic sentiment up

29.07.2010
Economic sentiment in the Eurozone rose during June, largely driven by the German economy, the European Commission has said.

The Commission’s Economic Sentiment Indicator for the euro area edged up by 2.3 points to 101.3 in July.

Brussels said July’s results had been strongly influenced by markedly positive readings in Germany.

The majority of Eurozone member states reported improvements in sentiment. Among the largest member states, Germany registered the most significant increase (+4.0), followed by France (+2.6) and Italy (+1.7). Improvements were less pronounced in the Netherlands (+1.2). In contrast, sentiment declined in Spain (-2.2).

Sentiment in industry, which increased by 2 points, was the main contributor to the overall improvement, the Commission said. Most respondents in this sector reported substantial improvements in their order books. However, managers were cautious on their production expectations.

Confidence among Eurozone consumers also regained momentum in July, rising by 3 points. More optimism about the general economic situation and very significant easing unemployment fears in Germany contributed to the overall improvement, Brussels noted.

Meanwhile confidence in services improved by 2 points, driven by brighter assessments of demand and the business situation over the past 3 months.

Economic sentiment in the retail sector increased by 2 points in the euro area mainly owing to upbeat business expectations in the UK and in Germany.

Sentiment in construction remained broadly unchanged, the Commission said.

The Commission also said today that the business climate indicator for the Eurozone also picked up in July.

This improvement suggests that economic activity in industry will continue to recover in the coming months, although it still has some way to go to reach its pre-crisis level, Brussels added.