Eurozone mood highest since August 2007 as Germany’s recovery continues

Julian Harris
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BUSINESS confidence in the Eurozone sprung back in February, rising above the expectations of economists to a 41-month high, official data showed yesterday.

The EU’s sentiment index recorded 107.8, a point up from January’s upwardly revised score of 106.8.

“Consumers, industry and services confidence all contributed to the rise,” said Eoin O’Callaghan of BNP Paribas.

“The breakdown remains one of divergence, however, with exceptionally strong sentiment levels in the core, particularly in Germany, and weaker, below average levels in the periphery.”

The news came after German GDP growth for the final three months of the year was announced at 0.4 per cent on the previous quarter.

The score was generally seen as positive for the Eurozone’s largest economy, which, like the UK, was hit by severe winter conditions.

“A drop in inventories subtracted 0.4 per cent from quarterly GDP growth and then the weather related plunge in construction activity in December subtracted another 0.4 per cent,” said Howard Archer of IHS Global Insight.

“These influences should be unwound in early 2011,” he predicted.

And there was more good news for the German recovery, as Munich-based Ifo Institute reported an easing of credit constraints in February.