Eurozone confidence in economy continues to grow in October

Consumers in the Eurozone have continued to become more optimistic, with consumer confidence for October rising from -14.9 to -14.5, in line with a preliminary estimate and at its highest level since July 2011 for the second month in a row.

The measure of confidence is still well below its average of minus 13.3, reflecting stubbornly high unemployment and slow wage growth.

At a 26-month high in October, the economic sentiment indicator (ESI) climbed to 97.8, beating expectations of 97.3 and September's 96.9, and marking the sixth consecutive monthly rise.

Ben May, European economist at Capital Economics, says the rise suggests the region's modest recovery has continued into the early stages of the fourth quarter. ESI, says May, points to annual GDP growth of nearly one per cent, consistent with more, although smaller, quarterly risies in GDP of around 0.2 per cent in the third and fourth quarter.

Business climate improved too, coming in at -0.01, after expectations of -0.15, and from September's -0.19 (revised from 0.20). Industrial confidence also beat expectations, coming in at -4.8, following an expected creep to -6.5 from September's -6.6.

The services sector, however, saw a decline of confidence in demand, with the services sentiment for October dropping to -3.7 from September's -3.2. Analysts had epxected a climb to -2.8.

Whilst improvement reflected developments in the core Eurozone economies, Spanish and Italian sentiment both fell, undoing most of the last month's gains.

Capital Economics comments that, although this morning's results are another sign that the Eurozone has continued to see growth, it "continues to think that the recovery will remain sluggish and that GDP growth will be weaker than the consensus expectation."