Eurozone economic sentiment sees end-of-year pickup

The European Commission's monthly business and consumer surveys suggested that the Eurozone economy gained some strength at the end of 2013.

Eurozone consumers were still lacking confidence in the economy in December, although not as much as in November. The consumer confidence index came in at -13.6 last month from -15.4 the month before.

Meanwhile, the economic sentiment indicator showed signs of improvement in feeling in the euro area, returning to its long-term average for the first time since July 2011, and vindicating hope that 2014 will see continued recovery. Hitting 100, it beat expectations - it was expected to reach 99.1 from November's revised 98.4 (was 98.5).

While improvements were geographically broad, difference between sentiment and implied rates of economic growth in the core and peripheral economies remain marked. Jonathan Loynes of Capital Economics points out that even in the core, "while Germany’s ESI of 106.0 points to reasonably solid growth, France’s reading of 95.3 points to stagnation or recession."

(European Commission)

He continues:

While the survey provides further hope that conditions in the euro-zone economy are slowly improving, the outlook is probably one of sluggish growth at best - we expect euro-zone GDP growth of about 0.5 per cent in 2014 - and there are few signs that the imbalances across the currency union are narrowing.

When it came to business attitudes, the EC's business climate indicator was down slightly on November's revised 0.31, at 0.27, but was above expectations.

Sentiment in the services sector improved in the month, increasing to a small 0.2 from a revised -0.9 (expected -0.5).

Lack of confidence in the industrial sector remained, however, with the indicator at -3.4 from -3.9 (expected -3.0).