Eurozone Consumer Confidence at Highest Level in Nearly a Decade--Update
20 May 2017 - 1:49AM
Dow Jones News
By Paul Hannon
The victory of a pro-European centrist in France's presidential
election has helped deliver a further boost to already high
consumer confidence in the eurozone.
The European Commission on Friday said its measure of consumer
sentiment across the 19-member currency area rose to minus 3.3 in
May from minus 3.6 in April, reaching its highest level since July
2007, more than a year before the onset of the global financial
crisis.
Emmanuel Macron secured almost two-thirds of the vote in May 7
elections, defeating the anti-euro Marine Le Pen, who vowed to
undertake contentious labor reforms in France as part of a push for
greater economic convergence among the eurozone's fractious member
states.
Mr. Macron's triumph followed March elections in the Netherlands
that saw Prime Minister Mark Rutte defeat anti-euro populist
candidate Geert Wilders. The French and Dutch votes reduce the
threat of a breakup of the currency area, with German elections due
later this year almost certain to return a pro-euro government.
Coming into 2017, it had seem possible that anti-euro
politicians would gain ground and possibly triumph in a series of
key polls, following voter revolts against the establishment in the
U.K. and the U.S.
But while investors and policy makers appeared nervous,
households have been less so, as the Commission's measure of
consumer confidence continued to strengthen ahead of the crucial
votes, and subsequently.
Rising consumer optimism since the middle of last year has been
driven by a slow, but steady decline in unemployment as well as
signs that the eurozone's economic recovery has become more deeply
rooted and widespread.
"Improved job markets and recent largely healthy economic news
are clearly buoying consumers," said Howard Archer, an economist at
IHS Markit. "A dilution of political uncertainties may also be
helping confidence."
More confident consumers tend to spend more freely, which would
aid the recovery and in turn make anti-euro politicians less likely
to triumph in the future. But the eurozone isn't out of the woods
yet, as another populist storm is brewing in Italy, where the
euroskeptic 5 Star Movement has remained strong and economic
growth, has remained especially anemic.
"Political risk has not disappeared, with euroskeptic parties
looking set to perform particularly well in Italy's general
election, which will be held by next May at the latest," said Jack
Allen, an analyst at Capital Economics.
Write to Paul Hannon at paul.hannon@wsj.com
(END) Dow Jones Newswires
May 19, 2017 11:34 ET (15:34 GMT)
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