According to data released by the European Commission, industrial confidence was higher than expected in September, followed by consumer confidence, which increased during the month. On the other hand, services sentiment came in below expectations.
The Industrial Confidence Index stood at 14.1 in September, higher than expectations of 12.5 and the previous month’s 13.8. The Consumer Confidence Index stood at -4, remaining in line with expectations and advancing from the previous month’s -5.3.
The business climate indicator stood at 1.72 after being at 1.74 in the previous month, while the economic sentiment indicator stood at 117.8, above expectations of 116.9, and the previous month’s 117.6. On the other hand, the services sector sentiment indicator came in lower than expected at 15.1, after being at 16.8 in the previous month.
These data suggest that consumers are reacting positively to the fact that the economy is recovering now that the vaccination campaign is advancing. This could eventually push the European Central Bank to reconsider its ultra-loose monetary policy stance.
However, given the quick spread of the Delta variant, inflationary pressure, and supply shortages, many believe that this optimism will be short-lived.
“Concerns about the Delta wave of Covid-19 infections, worsening supply shortages, surging energy prices, upheaval in parts of China’s overextended real estate markets and elevated inflation add up to an unpleasant mix,” commented an analyst at Berenberg.
So far, 58,795,216 COVID-19 cases have been reported in Europe, as well as 1,221,276 total deaths. The UK leads in the number of infections, with 7,736,235 cases reported including 136,375 related deaths, followed by Russia, France, and Spain.
Inflation is also surging in the bloc, though experts expect it to be short-lived. European Central Bank President Christine Lagarde commented that the current inflation numbers won't lead the bank to overreact, since they’re probably linked with the reopening of the economy and they will eventually cease.
Since the beginning of the week, the euro has dropped by 0.60% against the US dollar, losing ground for the fourth consecutive week. On Tuesday's session, the euro fell by 0.11%, closing the session at the 1.1681 level and losing ground for the third consecutive day.
By 13:14 GMT, the euro dropped by 3% against the US dollar, falling to the 1.1642 level.