EC business and household confidence survey suggests weak ongoing improvement, with more momentum for Germany

Bottom line: The August EC survey on euro area business and consumer confidence continues to signal weak economic improvement and some divergence across the euro area, with Germany presenting more improvement than other countries.

Improvement in the manufacturing sector was only marginal, with capacity utilisation up in Q3 (so far) but remaining well below the long-term average; the service sector confidence was also marginally up but still below the April level. Retail trade and consumer confidence were up, albeit marginally, while construction was stable.

Overall, today’s data remain consistent with our projection that the euro area is likely to see GDP growth slow in Q3 to 0.1% q/q after the Q2 surge of 1.0% q/q. It should be noted that the latest developments in the ESI are influenced by the change of classification of economic activities that was implemented for the business surveys in May, leading to a break in the series. The Commission signals that the change has affected the level, making interpretation more difficult, but did not on the whole affect the direction of the change.

source: BarCap