Euro Area: Economic sentiment recovers further but remains in pessimistic territory in July
Sentiment in the Eurozone recovered further lost ground in July from June, although it remained far from February’s pre-crisis level. It rose from 75.8 points in June to 82.3 points in July. That said, sentiment in the Eurozone remained deeply entrenched below its long-run average of 100 points.
July’s increase came on the back of improving sentiment in the industry, services and retail trade sectors. Moreover, financial services confidence also picked up. Confidence in the services sector grew the most. On the other hand, sentiment in the construction sector and among consumers dipped. That said, a notable increase in employment expectations was recorded across all surveyed sectors with the exception of the construction sector, where they worsened.
Among the largest economies of the Euro Area, the improvement was broad-based: sentiment strengthened notably in France, Germany, Italy, the Netherlands and Spain.
Commenting on the release, Peter Vanden Houte, Belgium and Luxembourg chief economist at ING, stated:
“The trough of the recession is now behind us and the European recovery fund and a possible vaccine next year should further support the recovery in 2021. But until then we remain a bit more cautious on the pattern of the recovery. The data suggests initially a V-shaped recovery but this is likely to morph into a more patchy pattern in the coming months.”