European confidence rises more than forecast

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: European confidence in the economic outlook rose more than economists forecast in June, adding to signs that record low interest rates and stimulus measures are helping to pull the region out of a recession.

An index of executive and consumer sentiment in the 16 nations that use the euro increased to 73.3, the highest since November, from a revised 70.2 in May, the European Commission in Brussels said today. Economists had forecast an increase to 71 from an initially reported 69.3 in May, according to the median of 24 estimates in a Bloomberg News survey.

The European Central Bank, which has cut its key interest rate to 1%, is lending banks as much money as they want for 12 months to get credit flowing, while governments across the bloc have stepped up spending to boost the economy. Siemens AG, Europe’s largest engineering company, said on June 22 it expects to win orders of about $21 billion from economic stimulus programmes.

“The worst of the recession is definitely over,” said Nick Kounis, chief European economist at Fortis Bank Nederland Holding NV in Amsterdam. “‘We would need another lunge downward to get the ECB moving toward fresh measures and these surveys tell us that’s not happening.” Consumer sentiment in the euro zone rose to minus 25 in June from minus 28 in May, the report showed. A measure of manufacturers’ confidence rose to minus 32 from minus 33, while confidence among retailers declined.

The euro-area economy is showing signs of stabilisation after shrinking at the fastest pace in at least 15 years in first quarter. Manufacturing and service industries contracted at the slowest pace in nine months in June and Germany’s Ifo index rose for a third month, according to data last week. ASML Holding NV, Europe’s largest maker of semiconductor equipment, earlier said it will return to regular working hours for its 1,100 Dutch factory employees. It also forecast that sales will rise in the second half compared with the previous six months.