By Dow Jones Business News, February 27, 2013, 05:35:00 AM EDT
LONDON--Manufacturers in the euro zone became much less gloomy about their prospects in February, reporting an
improvement in new export orders despite a stronger euro, while consumers were also less downbeat about the outlook for
The European Commission Wednesday said its Economic Sentiment Indicator for the euro zone--a combined measure of
business and consumer confidence in the 17 nations that share the currency--rose to 91.1 from 89.5 in January, reaching
its highest level since May 2012. That outcome was well above the rise to 89.8 that was forecast by economists.
However, confidence remains weak by historic standards, and below the average going back to 1990 of 100.00. While the
fourth straight monthly rise in the ESI indicates that the euro zone's economy is unlikely to weaken further after a
contraction of 0.6% in the three months to December, there may not yet be enough optimism to lead to a rise in spending
that would help drive a return to growth.
That is evident in the details of the consumer confidence element of the commission's monthly survey. The headline
measure rose to -23.6 from -23.9 in January, as people became less downbeat about the economic outlook. But they became
more fearful of losing their jobs, and less willing to make major purchases.
The most significant improvement in confidence was among manufacturers, with the headline measure jumping to -11.2
from -13.8 to reach the highest level since May 2012. Economists had expected a much more modest rise to -13.0.
The big surprise came from export orders, which many economists worried might suffer from the euro's appreciation in
the early months of this year. Instead, the sub-measure for export orders rose to -24.6 from -29.0, boosting the measure
for total orders.
The headline measure of confidence among service providers also rose, although much less sharply, while the measures
for retailers and construction companies fell, a reminder that many euro-zone businesses remain to be convinced that the
worst of the fiscal and banking crisis, and the economic contraction, is past.
All of the euro zone's larger economies recorded a pickup in their ESIs, the sharpest being recorded in Germany, while
the ESIs for Greece, Portugal and Cyprus also rose.
Write to Paul Hannon at email@example.com
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