European confidence in the economic outlook increased to the highest in 12 months in September as the economy showed signs of rebounding from the worst recession in more than six decades.
The European Commission's Economic Sentiment Indicator for the 16-nation euro region rose to 82.8, the highest since September 2008, from 80.8 in August, the EC said in Brussels said today. That was the sixth straight monthly gain.
Economists had projected an increase to 82.7, a Bloomberg survey showed.
Manufacturing and service industries expanded for a second month in September, and German business confidence climbed to a 12-month high, although rising unemployment may prompt consumers to rein in spending, curbing the recovery.
In the second quarter, the economy contracted just 0.1 per cent as Germany and France, the region's two largest economies, returned to growth.
European companies are starting to ramp up output to meet reviving global demand. European industrial orders rose for a second month in July, led by durable consumer goods, and exports increased 4.1 per cent from June. The euro-area services industry index showed a return to expansion in September.
Nonetheless, ECB policy makers, including ECB President Jean-Claude Trichet, have warned the recovery may face obstacles such as rising unemployment.
Europe's jobless rate probably rose to 9.6 per cent in August, according to a Bloomberg survey. That would be a 10-year high. The European Union's statistics office in Luxembourg will release the report on October 1st.
The commission also noted in today's report that the September increase in sentiment was the smallest since the upturn started in April. The August index reading was revised to 80.8 from the 80.6 reported on August 28th.
The world economy is emerging from the deepest slump since the 1930s following $2 trillion of government spending, tax breaks and infrastructure projects. The European Central Bank earlier this month kept its key interest rate at a record low of 1 per cent, with Mr Trichet saying the economy is past the worst and will show a "gradual recovery".
The euro-area economy may expand 0.2 per cent in the current quarter and 0.1 per cent in the three months through December, the commission said on September 14th.
Bloomberg