Confidence in eurozone economy rises

Businesses and consumers in the eurozone turned sharply more optimistic in June about their economic prospects, an EU survey showed on Thursday. Amid a high level of uncertainty in Europe and on global markets about the direction of bond market interest rates, growth and unemployment, spirits lifted in the eurozone even though debt clouds still hover over some countries. A monthly index of business and consumer confidence compiled by the European Commission rose by 1.8 points from the level in May to 91.3 points. The index for all 27 countries in the European Union rose by 1.8 points to 92.6 points. The Commission noted that confidence had also risen in the five main economies among the 17 which form the eurozone. The biggest increase, of 2.5 points, was registered in Spain which is still struggling to overcome its economic and debt problems and particularly high youth unemployment. The index for Italy rose by 1.7 points, for France which is also overhung by strains in its economy, by 1.3 points, in Germany the European Union powerhouse by 1.1 points and in the Netherlands by 0.9 points. This reflected a brighter view of prospects by business leaders in all sectors of the eurozone economy except the services sector, and also a sharp improvement in the way households see their financial future. The index now stands at the highest level since May 2012. Consumer confidence showed the biggest rise, jumping by 3.1 points to show the seventh monthly increase in a row. However, business confidence in the services sector was almost flat, slipping by 0.3 points. A separate measure of confidence in the financial sector showed an increase of 0.7 points. At Capital Economics in London, European economist Ben May commented that while the surveys "certainly made encouraging reading" it was too soon to say that the eurozone was about to recover from its crisis. The data suggested that eurozone gross domestic product may have begun to stabilise after shrinking for six months in a row. But this had happened before only to go into reverse, he said. "The eurozone economy remains fragile and there is no guarantee that the recent pick-up in sentiment will prompt the eurozone as a whole to exit recession in the near term," he said.