Nov — MNI analysts survey — Oct Revised
lowest median highest from
————————————————————————
Econ Sentiment 105.3 103.9 105.0 106.0 103.8 104.1
Industry 0.9 +0.8 +1 +3 0 —
Services 10.2 na na na 8.1 8
Consumers -9.4 -10 -10 -9.5 -10.9 -11
Retail -1.5 na na na -1.1 -1
Construction -26.4 na na na -25.4 -25
———————————————————————–
Business Climate: +0.96 na na na +0.91 +0.98
————————————————————————

PARIS (MNI) – Economic morale in the Eurozone surprised on the
upside again in November, with gains for industry, consumers and
especially the services offsetting a further erosion in retail and
construction, the European Commission said Monday.

After an unexpected 0.5-point rise in October (revised down from
+0.9 point), the Commission’s sentiment indicator gained another 1.5
points to 105.3, the highest level in three years and 5.3 points above
the long-term average.

Apart from a setback in May, when the series was revised, economic
morale has recovered steadily from the record low early last year. Along
with the improvement in other leading indicators this month, the survey
points to sustained growth in 4Q.

However, the survey also confirmed the divergences within the
Eurozone. Among the larger countries, the strongest monthly sentiment
gains this month were registered in Germany (+2.8 point), followed by
Italy (+1.4) and the Netherlands (+0.4). Morale recovered slightly in
Spain as well (+0.3) but was still nearly 10 points below average.

Driven mainly by Germany, Eurozone industry sentiment gained 0.9
point in November to stand more than eight points above the long-term
average. While producers’ assessment of recent activity slipped back to
September’s level, lower stocks and improving total orders and foreign
orders bolstered production prospects.

The Eurozone flash factory PMI signaled a pick-up in output (55.9)
and orders (56.0) in November. Here again, the gains in Germany and
France suggest that the results in other countries, to be released
Wednesday, remained subdued.

The Commission’s separate Business Climate Indicator was also
firmer in November (see below).

Sentiment in the services posted the strongest gain in November,
rising 2.1 points to stand 3.6 points below the long-term average.
Improving assessments of recent activity and particularly demand offset
a modest erosion in expected activity.

Confidence in financial services, which is not included in the
overall sentiment index, recovered 1.9 points to stand nearly three
points above average but was still below levels seen this summer. Gains
in recent activity and demand offset a marked drop in expected demand to
the lowest level since February.

As in manufacturing, the flash services PMI recovered to a
three-month high in November (55.2), although the pick-up in new
business was more modest (52.9).

The Commission’s flash estimate for consumer sentiment was revised
up marginally to show a 1.5-point rise in November to more than three
points above average, thanks to growing optimism about the overall
economy and a marked drop of unemployment fears in Germany.

With their financial situation improving and hopes for further
gains, households said they were spending more for big-ticket items and
expected to do so over the coming year as well, although the latter
component remained well below average everywhere except in Germany and
Finland.

By contrast, the retail sentiment index slipped another 0.4 point
in November after 0.2-point downturn in October, but was still 5.6
points above average. A marked setback in current business offset a
decline in stocks and improving prospects for the near term.

Construction morale fell back a full point after a 4.7-point
recovery since June to stand nine points below average. Builders said
recent activity and orders had slowed somewhat.

Sales price expectations rose markedly in November in industry and
retailing to stand well above average, but eroded slightly in the
services and construction. Consumers also expected stronger inflation
over the coming year, though far weaker than the long-term average.

This month’s PMI polls showed factory-gate prices (54.9) rising at
the quickest clip since September 2008, while services fees (49.3)
declined at the slowest pace in two years.

Hiring prospects improved again in all sectors except for
construction and the financial services, where they deteriorated. The
PMI polls also pointed to faster job gains in both industry (52.8) and
the services (53.1).

After a 0.15-point rise in October, the Commission’s separate
Business Climate Index edged up another 0.05 point in November to reach
a three-year high of +0.96, despite a slowdown in recent output.

Firms’ assessment of foreign order books improved, as did their
outlook for near-term production. The finished goods stocks component
rose as well but “remained at very low level,” the Commission said. The
results suggest “that the recovery in industry will continue in the
coming months,” it said.

–Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com

[TOPICS: M$XDS$,M$X$$$,MT$$$$]