Euro area economic sentiment rises

The euro area's recovery appears to be back on track. From Bloomberg:

European confidence in the economic outlook rose to the highest in more than two years in July and German unemployment declined for a 13th month as exports sustained a recovery in the region.

An index of executive and consumer sentiment in the 16 euro nations increased to 101.3 from 99 in June, the European Commission in Brussels said today. That’s the highest since March 2008. The number of people out of work in Germany fell a seasonally adjusted 20,000 to 3.21 million, the lowest since November 2008, the Federal Labor Agency said.

In contrast, confidence in the UK appears to have fallen in July. From Reuters:

Consumer morale fell to its lowest in almost a year in July as worries about the impact of government spending cuts drove expectations for the next 12 months to their lowest since the deepest point of the recession.

The GfK/NOP Consumer Confidence Index fell three points to -22, its lowest since last August and below analysts' forecasts for a more modest decline to -20.

In more bad news for the UK, credit and housing data released on Thursday were also weak. Reuters reports:

Mortgage approvals fell more than expected in June and overall lending stalled, Bank of England figures showed on Thursday, suggesting the housing market will continue to soften in the coming months.

The central bank said mortgage approvals -- a gauge of house prices around six months down the line -- numbered 47,643 in June, falling from a downwardly revised 49,461 in May and below forecasts for a reading of 49,000.

Net mortgage lending growth eased to 665 million pounds in June from May's downwardly revised 838 million pounds, below forecasts for a 1.0 billion pound rise.

The figures support recent evidence which indicates the housing market is running out of steam after strong house price rises last year, and come after mortgage lender Nationwide reported a 0.5 percent drop in house prices this month.

With the data flow around the world still providing a mixed picture of the economic outlook, central banks will be cautious about removing policy accommodation. Earlier on Thursday, the Reserve Bank of New Zealand raised interest rates again but announced a moderation in the pace of future rate increases. Bloomberg reports:

New Zealand’s central bank raised interest rates for a second straight month and signaled it plans to slow the pace of future increases, sending the nation’s currency to its lowest level in a week.

“Further removal of monetary policy stimulus is appropriate,” central bank Governor Alan Bollard said in a statement in Wellington today after boosting the official cash rate by a quarter percentage point to 3 percent. “The pace and extent of further cash rate increases is likely to be more moderate than was projected in the June statement.”