Wow! Who would have thought that I’d be discussing positive economic news in two commentaries in a row. It doesn’t happen too often, so listen up.
Last Friday, we saw the best news out of Europe we’ve seen in some time–in four months’ time to be exact.
Both improved business confidence and an unexpected drop in unemployment in France are two subtle hints that the EU economy could be on the mend.
The European Commission’s most recent survey of 35,000 executives involved in the business sector throughout the EU nations shows that the talking heads are seeing signs of a strengthening economy and feeling a lot more positive about the European business environment going forward.
Furthermore, separate surveys in France, Germany, and Italy over the past week have reiterated improved confidence in business prospects in 2005.
It appears that the weight of the first quarter slowdown has also been lifted somewhat off the shoulders of the European Central Bank (ECB). While many economists were expecting to see a rate cut from the ECB tomorrow, which would change the 2% benchmark interest rate for the first time since June 2003, it appears as though the plan might have changed.
Elwin de Groot, Fortis Bank Nederland NV Economist made the confident statement last week that “A rate cut is firmly off the table. The ECB will be watching to make sure inflation increases don’t continue.”
Of course, there are still hurdles to overcome. Despite seeing a lower unemployment figure in France, the EU as a whole is still struggling under a jobless rate near its five-year high. Consumer confidence is still lagging, and household spending and retail sales continue to be down.
Just as I mentioned in my commentary on Japan the other day, I wouldn’t yet bet that the EU economy is in the clear just yet.
If one thing’s clear right now it’s that the next few weeks and months will be very important to watch in the context of the short-term future of the global economy. Fortunately, you have PROFIT CONFIDENTIAL to guide you every step of the way.