EUROZONE ECONOMIC CONFIDENCE STRONGEST IN NEARLY 6 YEARS

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VIENNA (Alliance News) – Eurozone economic confidence strengthened for a fifth consecutive month in January to the highest level in nearly six years, signaling that the currency bloc entered the year 2017 on a strong footing, survey results from the European Commission showed Monday.

The economic confidence index rose to 108.2 in January, while it was expected to remain unchanged at 107.8. This was the highest since March 2011, when the reading was 108.3.

The mildly positive developments in euro-area sentiment resulted from improvements in industry, services and consumer confidence that outweighed decreases in retail trade and construction confidence.

The industrial sentiment index climbed to 0.8 from 0.0 in December. The score was seen at 0.1.

The improvement resulted from managers’ more optimistic production expectations, while their assessments of the current level of overall order books and their stocks of finished products were broadly unchanged.

Likewise, the services confidence index improved to 13.5 from 13.1 in the previous month. Positive developments were driven by managers’ brighter assessments of past demand and the past business situation.

The consumer sentiment index rose to -4.7 from -5.1 a month ago. The flash score was -4.9. The slight improvement reflected the optimistic outlook on unemployment and savings among consumers.

Meanwhile, the retail trade confidence index dropped to 2.4 from 3.5. The weakness mirrored more negative views on all three components, namely, the present and expected business situation and the adequacy of the volume of stocks.

Similarly, the construction sentiment index fell to -12.8 from -12.1 in the previous month. The drop was due to a downward revision in managers’ employment expectations, while their assessment of the level of order books remained broadly unchanged.

Another survey from the European Commission showed that the business confidence index held steady at 0.77 in January. Nonetheless, the score was below the expected level of 0.83.

Managers’ views on the future production and export order books improved strongly, while their assessment of the past production decreased markedly. On the other hand, managers’ assessments of their overall order books and their stocks of finished products remained broadly unchanged in January.

Robust consumer and business confidence in January boosts hopes that the Eurozone economy will see a decent start to 2017 after GDP growth highly likely picked up in the fourth quarter of 2016, IHS Markit economist Howard Archer said.

However, the economist cautioned that a significant concern remains that business and consumer confidence could be increasingly pressurized over the coming months by political uncertainties.

Eurostat is scheduled to publish GDP data on January 31. The economy is forecast to grow 0.4% in the fourth quarter after expanding 0.3% in the third quarter.

Copyright RTT News/dpa-AFX

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