Europe’s consumers appear to be slowly moving out of a long-term slump as confidence reached a 20-month high.
Confidence in the Eurozone increased by 1.1 points to reach minus 5.1 for December, according to flash estimates from the European Commission. A measure below zero indicates net negative sentiment, but the score is well above the long-term average for the currency bloc.
Meanwhile, the EU as a whole saw a stronger increase of 1.2 points from November, to reach minus 4.6.
The rise represents the fourth increase in a row, as consumer sentiment gradually starts to reflect steady, if sluggish, GDP growth, which has remained at 0.3 per cent per quarter for the past half year.
The survey shows consumers have largely shrugged off the widely expected Italian referendum result, as well as the election of Donald Trump in the US. However, major political events – most notably in the Netherlands, France, and Germany – have the potential to upset consumer confidence over the course of the next year.
Howard Archer, chief UK and Europe economist at IHS Markit, said: “This reinforces hopes that the Eurozone will have seen some pick-up in GDP growth in the fourth quarter and is set to see a decent start to 2017. Following lacklustre expansion of 0.3% quarter-on-quarter in both the second and third quarters, we expect Eurozone GDP growth to improve to at least 0.4% quarter-on-quarter in the fourth quarter and believe that 0.5% expansion is very possible.”
“However, we do have significant concerns over the Eurozone growth outlook for 2017 amid an uncertain political outlook,” he added.