Confidence in the economy remained high in the Eurozone in July as firms and consumers continue to take heart from healthy growth, a long-running survey has revealed.
Economic sentiment across the Eurozone edged up by 0.1 points to a reading of 111.2 according to the European Commission’s closely watched index, sustaining the strong momentum built up in June. Its long-term average is 100.
That means the indicator, which combines both business and consumer confidence readings, remains at levels last seen in 2007, before the global financial crisis caused a massive slump in the world economy.
Consumer confidence in the Eurozone dipped during the month, losing 0.4 points in the Commission’s index, but remained nevertheless near pre-financial crisis peak levels.
Germany led the way among the bigger Eurozone economies, where overall confidence in the economy gained 0.6 points. Although it weakened in Italy, France and Spain, the indicators still show economic sentiment at high levels relative to recent years.
Eurozone consumers and businesses have been buoyed in recent months by a perception of growing momentum, allied with hard data showing stronger growth, in some of the bloc’s largest economies.
Spain was today the latest country in the Eurozone to report healthy growth, with increased growth of 0.9 per cent in the second quarter of the year, triple the rate of the UK.
Sentiment has also been boosted by diminishing political risks, after business-friendly centrist Emmanuel Macron emerged as the President of France against an anti-euro opponent.
Across the Eurozone a quarterly survey of the manufacturing industry compiled in conjunction with the monthly sentiment reading found more signs of a growing economy.
Capacity utilisation grew for the fifth consecutive quarter, reading well above the long-term average at 83.2 per cent, while there was a decline in the proportion of managers reporting they had sufficient current production capacity. Firms’ expectations also heightened for increased export orders.
Declining capacity when faced by rising orders can prompt businesses to invest more, spurring further growth.