LONDON--An indicator that has correctly recorded contractions in the euro-zone economy suggests the currency area is edging closer to stabilization after a recession that began in late 2011.
Official figures for second-quarter economic activity won't be released until Aug. 14, but the monthly Eurocoin measure of euro-zone output signaled a contraction in the three months to June, and now points to a continuation of that as the third quarter began, although the scale of the decline in July was very slight.
The measure, which is compiled by the London-based Center for Economic Policy Research and the Bank of Italy, also showed a drop in gross domestic product in each of the three months of the first quarter, an indication borne out later when official data showed the euro-zone economy shrank 0.3%.
The CEPR and the Bank of Italy said Friday the Eurocoin indicator rose to minus 0.09% in July from minus 0.18% in June to reach its highest level since the first half of 2012.
The rise in the index, one of the earliest measures of economic activity in the currency area, is consistent with other recent surveys and indicators in recording an improvement in the economy, although it is at odds with manufacturing and services purchasing managers' surveys in that they pointed to an expansion this month for the first time since early 2012.
The CEPR and the Bank of Italy said the Eurocoin had been pushed higher by "the favorable signs coming from the surveys of households and firms and from the easing of tensions in the financial markets."
Those favorable signs continued to arrive Friday, as the results of a monthly survey conducted by France's national statistics agency showed consumers became more optimistic about their prospects in July.
Insee's headline measure of consumer confidence rose to 82 from 79 in June. That follows improvements in measures of business confidence in Germany, the Netherlands and Belgium, and consumer confidence in Italy.
However, any recovery that starts in the third quarter is likely to be anemic in the near term, as the euro zone continues to grapple with an array of problems. Governments in the 17-nation currency bloc are fighting to bring down debts, sharply limiting the scope for public spending to fuel growth.
Unemployment is at a euro-era high, while weakened banks have curbed the supply of credit to many businesses, suppressing investment.
Following its recovery from a deep contraction in the wake of the 2008 financial crisis, the euro zone's economy again contracted in the final three months of 2011 and continued to shrink in each quarter of 2012.
The Eurocoin indicator is intended to estimate quarter-to-quarter growth in gross domestic product, excluding erratic components, such as seasonal variations and short-run volatility. If confirmed by official data, the still weak state of the economy is unlikely to spur the European Central Bank into fresh action.
The ECB believes that returning the currency area to growth is largely the job of national governments and that there is little it can do to stimulate demand, having alreadycut its benchmark interest rate to a record low of 0.5%.
Unlike the U.S. Federal Reserve, the Bank of Japan and the Bank of England, the ECB hasn't embarked on a program of quantitative easing, using freshly created money to buy assets such as government bonds or mortgage-backed securities.
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Official figures for second-quarter economic activity won't be released until Aug. 14, but the monthly Eurocoin measure of euro-zone output signaled a contraction in the three months to June, and now points to a continuation of that as the third quarter began, although the scale of the decline in July was very slight.
The measure, which is compiled by the London-based Center for Economic Policy Research and the Bank of Italy, also showed a drop in gross domestic product in each of the three months of the first quarter, an indication borne out later when official data showed the euro-zone economy shrank 0.3%.
The CEPR and the Bank of Italy said Friday the Eurocoin indicator rose to minus 0.09% in July from minus 0.18% in June to reach its highest level since the first half of 2012.
The rise in the index, one of the earliest measures of economic activity in the currency area, is consistent with other recent surveys and indicators in recording an improvement in the economy, although it is at odds with manufacturing and services purchasing managers' surveys in that they pointed to an expansion this month for the first time since early 2012.
The CEPR and the Bank of Italy said the Eurocoin had been pushed higher by "the favorable signs coming from the surveys of households and firms and from the easing of tensions in the financial markets."
Those favorable signs continued to arrive Friday, as the results of a monthly survey conducted by France's national statistics agency showed consumers became more optimistic about their prospects in July.
Insee's headline measure of consumer confidence rose to 82 from 79 in June. That follows improvements in measures of business confidence in Germany, the Netherlands and Belgium, and consumer confidence in Italy.
However, any recovery that starts in the third quarter is likely to be anemic in the near term, as the euro zone continues to grapple with an array of problems. Governments in the 17-nation currency bloc are fighting to bring down debts, sharply limiting the scope for public spending to fuel growth.
Unemployment is at a euro-era high, while weakened banks have curbed the supply of credit to many businesses, suppressing investment.
Following its recovery from a deep contraction in the wake of the 2008 financial crisis, the euro zone's economy again contracted in the final three months of 2011 and continued to shrink in each quarter of 2012.
The Eurocoin indicator is intended to estimate quarter-to-quarter growth in gross domestic product, excluding erratic components, such as seasonal variations and short-run volatility. If confirmed by official data, the still weak state of the economy is unlikely to spur the European Central Bank into fresh action.
The ECB believes that returning the currency area to growth is largely the job of national governments and that there is little it can do to stimulate demand, having alreadycut its benchmark interest rate to a record low of 0.5%.
Unlike the U.S. Federal Reserve, the Bank of Japan and the Bank of England, the ECB hasn't embarked on a program of quantitative easing, using freshly created money to buy assets such as government bonds or mortgage-backed securities.
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