• Friday, March 01, 2024
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BusinessDay

Euro-Area economic confidence increases more than forecast

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Euro-area economic confidence increased more than economists forecast in December, buoying up policy makers as they grapple with the legacy of the currency bloc’s longest recession.

An index of executive and consumer sentiment rose to 100 from a revised 98.4 in November, the European Commission in Brussels said Friday.

That beats the median estimate of 99.1 in a Bloomberg News survey of 24 economists, and is the highest reading since July 2011.

“The economic recovery is gradually gaining momentum,” London-based Barclays Plc analyst Apolline Menut said. “The pace of growth will remain moderate in 2014 as the euro area lacks clear growth drivers and several downside risks remain, such as bank lending, while unemployment won’t improve significantly in the short term.”

The confidence report comes just before the European Central Bank wraps up its January monetary-policy meeting, at which the Governing Council is expected to keep the main refinancing rate at a record-low 0.25 percent.

The Frankfurt-based central bank sees “no immediate need to act” further on rates thanks to “encouraging signs” that the euro area’s crisis is easing, President Mario Draghi said on Dec. 28. The ECB estimates that the economy will expand 1.1 percent this year after contracting 0.4 percent in 2013.

The commission’s industrial confidence index rose to minus 3.4 from minus 3.9 in November, the report showed, missing analysts’ estimates.