Bright outlook

The European Commission said on Friday its closely watched Economic Sentiment Indicator (ESI) for the 16-member European currency zone has climbed for the fifth consecutive month.

The ESI in August increased sharply overall – by 5.9 points in the EU and 4.6 points in the eurozone – to 80.9 and 80.6 respectively. These figures are markedly higher than the record low of 64.6 points in March.

Commerzbank economist Christoph Weil said he was confident the indicator would continue to rise toward 100, regardless of how strong the upswing turns out to be.

Among the larger EU economies, the greatest signs of improvement were seen in Britain (up 9.7 points) and the Netherlands (7.6 points). Germany saw its economic sentiment index climb 5.1 points in August.

Various indicators pointing up, but so is unemployment

The release of the Commission survey follows the publication of data showing that France and Germany had unexpectedly exited recession during the second quarter of this year.

The German consumer confidence index also rose for the fifth straight month.

The European Union's statistics office, Eurostat, said factory orders in the 16-nation eurozone also rose 3.1 percent in June after slipping half a percentage point in May.

"With other eurozone business surveys also rising sharply, the chances of the region expanding in Q3 are growing," Ben May, an economist with the research group Capital Economics, said.

On a more somber note, however, economists also expect unemployment figures in the eurozone to rise in the coming months as the recession catches up with the labor market.

The European Commission has forecast that the jobless rate in the eurozone will climb to more than 11 percent in 2009 after hitting a decade high of 9.4 percent in June.

gb/dpa/afp

Editor: Sonia Phalnikar