Economic sentiment in the eurozone was stable in July, according to the European Commission, suggesting that the eurozone’s gradual recovery is likely to continue.

The Economic Sentiment Indicator rose by 0.1 point to 102.2 points. It overtook the the long-term average of 100 points in December and reached 102 points in April.

July’s marginal increase masks a boost in confidence among industry of 0.6 points, whereas confidence fell among consumers by 0.9 points and service providers by 0.8 points.

Overall confidence rose in Italy by 1.6 points, France by 0.5 points and the Netherlands by 0.4 points, but fell in Spain by 0.5 points and in Germany by 0.6 points.

The figures for confidence among service providers and consumers in the eurozone suggest that internal demand in the eurozone will remain weak, making a rapid improvement in growth unlikely.

This would be accentuated by the amount of existing spare capacity. According to the Commission’s figures, the estimated capacity rate of eurozone industry is 79.8%, while the equivalent rate for services is 87.3%.

Indeed, the Economic Sentiment Indicator would appear to contradict data contained within the Purchasing Managers Index published last week by Markit, which showed that business confidence in the eurozone is growing, in particular in the services sector.

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