Morale in euro area edges up despite Spain

 
Julian Harris
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THE RECESSION in the Eurozone was exposed by more bearish data released yesterday, yet a survey of confidence from Brussels suggested that hopes for a recovery are starting to grow.

In crisis-struck Spain the downturn worsened in the final three months of the year, figures showed, while retailers across the single currency area are continuing to report economic contraction in their industry.

Output in Spain collapsed 0.7 per cent in the final quarter of 2012, down 1.8 per cent from the same period a year earlier.

And Markit’s latest purchasing managers’ index (PMI) for retailers across the euro area as a whole showed a 15th consecutive month of declining sales. The PMI edged up from 44.5 in December to 45.9 in January, but remains below the 50 no-change mark.

Yet a measure of economic confidence in the Eurozone, published by the European Commission, edged up in January.

The Commission’s economic sentiment indicator rose by 1.4 points in both the Eurozone (to 89.2) and the wider European Union area (to 90.6).

Both levels remain sunk below the 100 mark, however, which represents the average between 1990 and 2012.

In Italy a separate survey of business confidence also edged up, from an index score of 79.9, up from 75.6 in December.

And confidence in Italy’s prospects also appeared to be improving, as the government paid less to borrow over five and 10 years than it had since October 2010. The Treasury raised €6.5bn (£5.6bn), the top of its €4.5-6.5bn target range, €3.5bn of which was 10-year debt. Rome paid a yield of 4.17 per cent for the 10-year paper, down from 4.48 per cent at the end-December sale and below 4.23 per cent in the secondary market around the time of the auction. Ten-year yields were little changed after the results, up five basis points.