Following a record drop in economic sentiment in March and April because of the impact of the novel coronavirus pandemic induced lockdowns, the sentiment in Euro zone grew in August for the fourth consecutive month. This was revealed in a survey released on Friday by the European Commission.
The monthly indicator designed to gauge confidence in the economy grew to 87.7 points from 82.4 in July which was above the 85.0 point average forecast of economists polled by Reuters, even though the number was well below the pre-crisis levels and the long-term average.
Driven majorly by higher optimism in the service sector, the largest component in the economy of the 19-country currency bloc, this new uptick in confidence confirmed the gradual rebound from May. It however still remained in the negative territory but increased to -17.2 in August from -26.2 in July.
Even though factory managers’ production expectations went down slightly after three consecutive months of increases that pulled them to above pre-crisis levels, there was also an increase in the industry and retail trade sectors.
There was also a slight recovery in consumer confidence to -14.7 points from -15.0 which were in line with the preliminary estimates released by the Commission earlier in August.
Despite a slight fall in consumer price expectations, a slightly higher appetite for major purchases was predicted in the coming twelve months, the survey showed, along with a small fall in such major spending for now.
The survey showed that for the fourth consecutive month, there was continued improvement in the employment expectations indicator with a slight worsening in the confidence in the construction sector.
Among the bloc’s largest economies, sentiment improved markedly in France, the Netherlands and Germany. It also rose in Italy, but it fell in Spain.
(Adapted from Reuters.com)