Eurozone consumer spirits brighter in November on hopes for fiscal spending

Eurozone consumer sentiment perked up in November, rising to its highest level since December 2015, possibly on the back of expectations that governments in the single currency bloc might be set to loosen the purse strings.

The European Commission´s gauge of consumer sentiment improved by 1.9 points to stand at -6.1, ahead of the -7.8 that markets had been anticipating.

A similar gauge referencing the European Union improved by 0.7 points to -5.8.

"Much stronger than we expected, and if these data continue we will have to revise our forecast for Q4 consumers’ spending up," Pantheon Macroeconomics´s Claus Vistesen said in a research report sent to clients.

Vistesen believed normalising energy prices ought to dampen sentiment.

However, one intriguing possibility was that euro area households might have been led by US president Donald Trump´s victory to expect their own politicians to carry out similar changes in the policy agenda, he said.

"[...] regardless of whether it plays out or not—this could be lifting sentiment. At this point, though, this merely is a suggestion to account for recent stronger data. It is difficult to verify this postulate after all," Vistesen added.

Daniel Christen, assistant economist at Capital Economics was more cautious, telling clients that: "November’s rise in euro-zone consumer confidence suggests there has been no immediate hit from the US election result, but the index still points to a slight slowdown in household spending growth. [...] It suggests that the consumer sector is still being supported by the effects of low inflation and the prospect of a minor fiscal loosening."