Investors became increasingly confident about the Eurozone’s economic recovery in September, with a closely watched sentiment gauge hitting its highest level since February.
The Sentix Eurozone economic index came in at minus eight this month, up from minus 13.4 in August. It was the fifth straight rise since the index slumped to minus 42.9 in April as countries locked down due to coronavirus.
Investors were much more satisfied with the current economic situation. They remained somewhat wary about the future, however, with the “expectations” gauge staying roughly flat.
“The economic recovery following the Corona-induced slump in the global economy continues at the beginning of September,” said Manfred Huebner, managing director at data firm Sentix.
“However, these values are still largely in negative territory, meaning that the recessionary tendencies have not yet been fully overcome.”
The Eurozone economy contracted by a record 12.1 per cent in the second quarter of the year as business activity shuddered to a halt and the house-bound public stopped spending.
Coronavirus cases hurting Eurozone rebound
Economic activity picked up as lockdowns were lifted, with survey data for July showing that the Eurozone achieved strong growth.
However, recent rises in coronavirus cases around Europe have threatened to derail the comeback. Survey data for August showed that the recovery had slowed.
The Sentix index’s seven-month high will therefore cheer policymakers. Huebner said Sentix’s index “is improving mainly due to a better assessment of the current situation”.
“But the way out of the recession remains a long way off, as the current value of minus 33 for the situation assessment shows.”
Investors are eagerly awaiting the meeting of the European Central Bank (ECB) on Thursday.
Daniela Ordonez of Oxford Economics said: “Most notably, the negative inflation reading in August has increased the pressure on the ECB to be ready to act.”