Euro Area: Economic sentiment continues to strengthen in August but remains in pessimistic territory
Sentiment in the Eurozone recovered further lost ground in August from July, although it remained far below February’s pre-crisis level. It climbed from 82.4 points in July to 87.7 points in August. That said, sentiment in the Eurozone remained deeply entrenched below its long-run average of 100 points.
August’s rise came on the back of improving sentiment in the industry, retail trade and services sectors. Moreover, financial services confidence also picked up. Confidence in the services sector increased the most. Meanwhile, sentiment in the construction sector and amongst consumers remained broadly unchanged. A modest rise in employment expectations was recorded across all surveyed sectors except in the construction sector, where they slipped.
Among the largest economies of the Euro Area, the improvement was for the most part broad-based: sentiment firmed notably in France, the Netherlands, Germany and Italy. However, sentiment retreated in Spain.
Commenting on the release, Peter Vanden Houte, Belgium and Luxembourg chief economist at ING, stated:
“The good news is that the growth pace in the third quarter is holding up for now. But after the horrible second-quarter growth figures on the back of lockdowns in most member states, the opening of the economy was unsurprisingly going to result in strong growth in the third quarter, nurturing the hope for a V-shaped recovery. But that is just a mechanical effect. If you go from nearly no activity to some activity, you’ve got strong growth. The question is what lies beyond.”