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Shoppers help eurozone confidence improve in January

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Economic morale in the eurozone rose slightly at the start of this year as shoppers appeared more optimistic in Germany, Spain and Italy, but the divisions in the weak economy were underscored by a fall in overall sentiment in France.

[BRUSSELS] Economic morale in the eurozone rose slightly at the start of this year as shoppers appeared more optimistic in Germany, Spain and Italy, but the divisions in the weak economy were underscored by a fall in overall sentiment in France.

The mood among businesses and households rose by 0.6 points to 101.2 in January from December, the European Commission said on Thursday, although that was marginally less than the 10l.5 level expected by economists polled by Reuters.

Of the eurozone's major economies, economic sentiment rose in Germany, Spain and Italy, but fell in France and the Netherlands.

The Commission's separate business climate indicator improved in January compared to the previous month, but was still lower than in November.

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Deflation and the eurozone's struggle to return to growth have eaten away at business confidence that was badly damaged by the bloc's 2009-2012 crisis, prompting the European Central Bank to announce a money-printing plan to revive inflation.

The Commission expects the eurozone economy to finally pick up this year and reach modest growth in 2016.

Signs that a recovery might be underway were helped last week when a Markit Eurozone Composite Flash Purchasing Managers'Index survey of thousands of companies bounced to a five-month high of 52.2.

As with the PMI survey, the increase in confidence in January came from long-suffering households and shoppers, despite near-record unemployment. Consumer confidence in January in the eurozone improved to a six-month high of -8.5 from -10.9 in December.

Many appeared more confident about making major purchases and see prices falling over the next 12 months. "Consumers' assessments of the future general economic situation and future unemployment improved strongly," the Commission said in a statement.

Partly as a result, confidence in retail trade also improved.

REUTERS

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