Eurozone economic confidence improves more than expected

Eurozone economic confidence unexpectedly improved in December, according to official figures released by Eurostat.

Confidence was lifted by an improvement in both services and industrial confidence readings, with sentiment boosted by low fuel prices and the European Central Bank's enthusiasm for monetary policy.

The headline eurozone sentiment index for December rose to 106.8, from the previous month's 106.1 and ahead of consensus estimates of 106.

Eurozone consumer confidence was at -5.7, up from -5.9 the previous month and estimates for the same, while the business climate indicator rose to 0.41, above November's 0.36 and forecasts for 0.39.

The readings for services and industrial confidence index both beat the prior month's and their respective estimates, while retail confidence fell to a four-month low and confidence in the construction sector fell trivially.

Across countries, sentiment was virtually stable in Germany, France and Italy, but jumped three points in Spain to 112.4 from 109 in November, in slight contrast to recent softening in the PMIs.

"Unyieldingly bullish", was the one-line review of Pantheon Macroeconomics' Eurozone specialist Claus Vistesen.

"Another strong sentiment report as the main confidence index rose to its highest level since 2011, likely supported by low energy prices and the promise of looser monetary policy for longer."

Jennifer McKeown at Capital Economics noted that the consumer confidence index remained consistent with a slowdown in spending growth.

"This picture is supported by the unexpectedly weak 0.3% monthly fall in euro-zone retail sales in November. Admittedly, spending will continue to receive some support from the steady improvement in the labour market, with the unemployment rate falling from 10.6% to 10.5% in November.

She summed up the raft of Eurostat data brought "more evidence of a continued recovery in the euro-zone at the end of 2015, but we suspect that growth will soften this year as temporary boosts from low inflation and a weaker euro fade".