Friday, 7 January 2011

Eurozone confidence rises to highest since October 2007

Economic reports from the euro area on Thursday were, on the whole, quite positive. From Bloomberg:

European confidence in the economic outlook improved more than economists forecast in December, led by increasing optimism among German manufacturers.

An index of executive and consumer sentiment in the euro region jumped to 106.2 from 105.1 in November, the European Commission in Brussels said today. That’s the highest since October 2007. Economists forecast a gain to 105.8, the median of 14 estimates in a Bloomberg News survey showed. Euro-area retail sales fell 0.8 percent in November from the previous month, a separate report showed.

Confirmation of the strength in the German economy comes from another report from Bloomberg.

German factory orders rose five times more than economists forecast in November, driven by demand from outside the euro region.

Orders, adjusted for seasonal swings and inflation, surged 5.2 percent from October, when they gained 1.6 percent, the Economy Ministry in Berlin said today. That’s the biggest gain since January last year. Economists expected a 1 percent increase, according to the median of 24 estimates in a Bloomberg News survey. From a year earlier, orders climbed 20.6 percent when adjusted for working days.

Just outside the euro area, however, the UK provided disappointing data. From Reuters:

Large swathes of the service sector suffered their first fall in output since April 2009 last month, a major survey showed on Thursday, pointing to a sharp slowdown in economic growth at the end of 2010.

GDP probably grew by just 0.4 percent in the last three months of 2010, lower than many economists have forecast and barely half the 0.7 percent recorded in the third quarter of the year, survey compilers Markit said.

The Markit/CIPS services purchasing managers' index dropped to 49.7 in a December marked by unusually snowy weather, in contrast to economists' forecasts that it would hold steady at November's reading of 53.0. Readings below 50 indicate contraction.

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