Economic sentiment in the recession-hit eurozone
brightened in May, raising hopes of a modest recovery later in the
The European Commission said Thursday its closely watched economic sentiment indicator (ESI) rebounded to 89.4 points this month, after falling to 88.6 points in April. This was in line with analysts' forecasts.
"The recovery was driven by brightening sentiment in all business sectors except for construction," the commission said.
The survey index measuring confidence in the building industry fell 2 points as construction companies were hit by a long cold winter.
But the fall in the construction business was cancelled out by a gain in confidence in the 17-member currency bloc's services and industrial sectors, as well among retailers and consumers.
The sixth consecutive rise in consumer confidence left the index measuring the mood among households at its highest level in nearly a year.
The gain in consumer confidence was despite record high unemployment across the region.
"The positive overall developments were also reflected in a sharply improving assessment (by industry) of the past production and moderate improvements with regard to the current level of export order books," the commission said.
Boosting the ESI was a rise in confidence in the eurozone's three biggest economies - Germany, France and Italy - as well economies at the centre of the debt crisis including Portugal and Greece.
"The European Commission's consumer and business survey for May suggests that the recession may be easing," said Ben May, European economist at the research group Capital Economics.
"But the survey still suggests that eurozone gross domestic product is shrinking, implying that the European Central Bank (ECB) may eventually announce more policy support," he said.
Other economists echoed May's comments.
"While it is encouraging to see that confidence is again moving in the right direction, there is a long way to go before confidence is restored," said ING bank economist Martin van Vliet.
"Any nascent economic recovery later this year is therefore likely to be slow, and will probably be largely confided to the 'core' countries (such as Germany and other northern European states)," he said.
The commission's survey also found that employment plans were revised upwards in the retail trade along with the industrial and services sectors, but were revised down sharply in the construction industry.
The commission said confidence in the broader 27-member European Union also rose in May, climbing to 90.8 points from 89.7 last month.
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