Eurozone Consumer Confidence Index Is Signaling a Recovery

According to a report from the European Commission, the Eurozone Consumer Confidence Index stood at -1.5 in August compared to -1.7 in July 2017.

The index has been showing gradual improvement since February 2017. The Eurozone’s major economic indicators (VGK) (IEV) (HEDJ) including the manufacturing PMI (purchasing managers’ index), the services PMI, the business sentiment index, inflation, and GDP growth, are improving gradually.

In 2Q17, household consumption and consumer spending contributed the most to the Eurozone’s GDP. Improving consumption is a positive sign for the economy. The rising consumer demand is indicating that the demand outlook is changing. The higher demand will likely improve the profit margin of various companies. However, the stronger euro (FXE) in the last three months hampered the country’s exports.

The major indexes of the Eurozone (EZU) such as the DAX Index (EWG) and the CAC 40 Index (EWQ) fell nearly 0.9% and 0.7%, respectively, between August 1 and August 30, 2017. The weaker performance of the major indexes was mainly due to the lower-than-expected earnings growth of various businesses.

In the next part of this series, we’ll analyze the performance of Germany’s Ifo business climate index in August 2017.