Berlin - The economic mood in Europe continued to brighten in November, with a key sentiment survey released Friday rising to its highest level in 14 months. The European Commission's closely watched industry and consumer sentiment index for the 16-member eurozone rose for the eighth consecutive month, climbing from 86.1 points in October to 88.8 in November.
This took the monthly indicator to its highest level since September last year when the implosion of the US investment bank Lehman Brothers helped to plunge the world economy into its steepest recession in more than 60 years.
Analysts had predicted that the indicator would edge up to 88.0 in November amid expectations that growth has been gaining ground in the eurozone economy, which climbed out of recession during the three months to the end of September.
Economists said the bigger-than-forecast rise in economic sentiment in the eurozone also points to the currency bloc expanding during the final quarter of the year.
The commission's index tumbled to a record low 64.6 points in March as the global recession tightened its grip on the eurozone economy.
Helping to underpin the eurozone's return to economic growth has been the big anti-crisis fiscal stimulus plans rolled out by governments across the currency bloc as well the moves by the European Central Bank (ECB) to cut rates and to launch a series of so-called unorthodox monetary measures.
The release of the commission's latest survey comes as part of the build up to next Thursday's meeting of the ECB's rate-setting council with the bank expected to leave its benchmark refinancing rate on hold at an historic low of 1 per cent.
While analysts are not expecting the ECB to begin tightening monetary policy until later next year, ECB chief Jean-Claude Trichet has already signalled that the bank plans to to exit its emergency liquidity measures gradually.
But despite the higher-than-forecast increase in the commission's November survey, economic sentiment remains well below the indicator's long-term average of 100.
"Consequently, while the ECB may be on the verge of scaling back some of it emergency liquidity operations, actual rate hikes still appear to be a distant prospect," said ING Bank economist Martin van Vliet.
Trichet is also scheduled to unveil next Thursday the Frankfurt- based bank's latest so-called staff projections, which will set out new economic growth and inflation forecasts for the eurozone.
The European Commission forecasts that the eurozone will grow by a modest 0.7 per cent next year before accelerating by 1.5 per cent in 2011 and after contracting by a sharp 4 per cent in 2009.
In the meantime, data to be released Monday is forecast to show eurozone inflation returning to positive territory during November with analysts expecting the European Union's statistics office Eurostat to say annual consumer prices came in at 0.5 per cent this month. This compares with minus 0.1 per cent in October.
Friday's survey showed the pickup in economic sentiment in the eurozone was broadly based.
While confidence in the industry sector edged up from minus 21 to minus 19, confidence in the services confidence jumped from minus 7 to minus 4.
However eurozone consumers were more cautious. The commission's survey measuring consumer confidence rose from minus 18 to minus 17.
Indeed, hanging over the economic outlook for the eurozone are the risks posed to growth by the threat of lengthening job queues as governments start to draw down their anti-crisis fiscal plans and as employers face up to the prospects of only muted economic growth.
Rising job fears could in turn undercut private consumption in the economy shared by euro member states.
Eurostat data to be released Tuesday is expected to show unemployment in the eurozone creeping up to 9.8 per cent in October from 9.7 per cent in October.
At the same time, the euro's 20-per-cent increase against the dollar since the start of the year is threatening to dampen demand for the eurozone's key exports.
