Eurozone consumer confidence rides to 2016 high

Posted on November 22, 2016

Brexit? What Brexit?

A gauge of consumer confidence in the eurozone has soared to its highest level of the year, beating economists’ forecasts in November.

The European Commission’s measure of sentiment in the single currency area climbed to hit -6.1 this month, a rise of 1.9 points and beating forecasts of a leap to -7.8.

November’s figures are the latest sign that buoyant consumers are likely to drive the eurozone’s economic recovery, helped along by low inflation and shrugging off any adverse side-effects from the Brexit vote and the election of Donald Trump as US president.

Growth in the 19-country bloc slowed to just 0.3 per cent in the third quarter of the year and is expected to remain at a steady pace over the following quarters.

Political risks loom on the horizon, however, with Italy’s referendum next month and elections due in Austria, the Netherlands, France and Germany in the next 12 months.

This month’s confidence numbers suggest the “eurozone is on course for improved GDP growth in the fourth quarter”, said Howard Archer at IHS, who expects GDP growth to accelerate by 0.4 per cent at the end of the year.

Daniel Christen at Capital Economics noted the confidence numbers suggested consumer spending would moderate slightly in the fourth quarter.

Amid still weak inflation, the European Central Bank is set to extend its landmark bond-buying to support growth and prices in the eurozone beyond March 2017 at its latest policy meeting next month.

“Despite the prospect of monetary policy being loosened even further in December, we expect the recovery in the consumer sector to slow into 2017″, said Mr Christen.

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