Economy

Economic confidence in euro zone edges up in November

Weak inflation rate in 19-country monetary union finally showing signs of picking up

ECB president Mario Dragh: said it was premature to be “sanguine” about outlook. Photograph: Frederick Florin/AFP/Getty Images

Tue Nov 29 2016 - 12:12

Euro zone economic confidence has inched up ahead of a much-anticipated European Central Bank decision that will take place amid signs of brightening prospects for the 19-country region.

An index of executive and consumer sentiment increased to 106.5 in November from a revised 106.4 in October, the European Commission in Brussels said on Tuesday.

The data comes just as the long-anaemic inflation rate in the euro area is showing signs of picking up and growth forecasts are signalling continued growth. Still, ECB president Mario Draghi has cautioned that although there are "encouraging trends", it is premature to be "sanguine" about the outlook, which remains dependent on monetary support.

“Draghi has hit the nail on the head. We have a moderate recovery – it’s been pretty steady despite market turbulence,” said Alexander Koch, an economist at Raiffeisen Schweiz in Zurich. “But especially in the periphery, save for in Spain, it has not been strong enough to turn around the labour market.”

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Eurostat will release October unemployment data on Thursday, preceded by November inflation figures due on Wednesday.

ECB meeting

ECB officials are considering extending their asset-purchase programme, due to expire in March. Draghi has ruled out a sudden stop of quantitative easing and reiterated on Monday that the central bank was determined to “preserve the substantial degree of monetary accommodation necessary” to meet its objective of pushing inflation to its target of just below 2 per cent. The rate was 0.5 per cent in October. An announcement could come at the ECB’s December 8th meeting, when new growth and inflation forecasts will be issued. Sentiment improved among consumers, retailers and builders, as well as in financial services, according to commission data.

- Bloomberg

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