Despite declining in February, Eurozone consumer confidence still point to a bright household spending growth in the near future and this may boost economic recovery this year, Stephen Brown, an economist at Capital Economics, said.
The consumer confidence index dropped for the first time in seven months in February, to 0.1 from 1.4 in January, data from the European Commission showed on February 20. However, the index remained well above the long-run average of -12.0, the economist observed.
Consumer confidence was probably hit by the sharp fall in global equity prices at the start of February, Brown noted.
The economist said the sentiment index remains consistent with annual household spending growth rising to as high as 3.0 percent. As the index has overstated growth in recent quarters, spending growth is unlikely be quite that strong, the economist pointed out.
Nonetheless, Capital Economics expects bright prospects for consumer spending in the coming months.
The economist said temporary factors that weighed on household spending in the fourth quarter are set to reverse in the first quarter. Looking further ahead, employment should continue to rise.
“In all, continued healthy spending growth is one reason why we expect the euro-zone’s economic recovery to continue apace this year, with GDP growth of 2.5 percent, Brown concluded.
Source: RTT News