Economic confidence in the euro area unexpectedly rose in November even as the single-currency bloc was mired in its second recession in four years and leaders worked to contain the debt crisis.
An index of executive and consumer sentiment in the 17- nation euro area increased to 85.7 from a revised 84.3 in October, the European Commission in Brussels said today. Economists had forecast no change from an initial October reading of 84.5, the median of 33 economists’ estimates in a Bloomberg News survey showed.
Euro area finance ministers earlier this week eased the terms on emergency aid for Greece, declaring that after three years of false starts that Europe has found the formula for nursing the debt-stricken country back to health.
“Today’s numbers are good news and could mean a turnaround,” Marco Valli, chief eurozone economist at UniCredit Global Research in Milan, said by telephone. “While the final quarter of this year still will be clearly negative, the unexpected rise indicates that the economy could stabilize at the beginning of 2013.”
The euro has gained 3.6 percent against the dollar in the past three months as European leaders stepped up their crisis response and the ECB pledged to purchase bonds of distressed nations if they ask for external aid first. It traded at $1.2991 at 11:31 a.m. in Brussels, up 0.3 percent on the day. The Stoxx Europe 600 Index advanced 0.8 percent.
While at least five euro area countries are in recession, business confidence in Germany, France and Italy, the region’s three biggest economies, increased this month.
The euro area posted two successive quarters of negative growth through September and economists foresee a further contraction of 0.3 percent in the fourth quarter, the median of 25 forecasts in a separate Bloomberg survey showed. With unemployment at a record, the Organization for Economic Cooperation and Development this week forecast contractions of 0.4 percent and 0.1 percent this year and next.
A gauge of sentiment among European manufacturers improved to minus 15.1 from minus 18.3 in October, today’s report showed. An indicator of services confidence rose to minus 11.9 from minus 12.1, while consumer sentiment declined to minus 26.9. Sentiment in the construction industry fell from the previous month.
Henkel AG Chief Executive Officer Kasper Rorsted on Nov. 16 warned of a European “crisis that seems to be ongoing and not letting go,” as his company, the German maker of Loctite glues and Persil detergent, reported third-quarter earnings that missed analysts’ estimates. [Bloomberg]