Eurozone Economic Confidence Highest Since 2011

Eurozone economic confidence rose to the highest level in almost six years in a sign of continued momentum as the European Central Bank prepares to update its outlook for growth and inflation.

An index of executive and consumer sentiment in the region increased to 108 in February from 107.9 the previous month, the European Commission in Brussels said Monday. That compares to a 108.1 median estimate in a Bloomberg survey of economists.

The latest health check on the recovery follows a string of positive data suggesting the 19-nation bloc is coping with challenges in a potentially tumultuous year. So far, rising support for euro-skeptic parties ahead of national elections in a number of eurozone countries has done little to hurt growth, with a gauge for economic activity jumping to a near six-year high in February and unemployment on a downward path.

“Overall, it’s an encouraging reading, it’s slightly weaker than expected, but in general the trend is firmly moving up,” said Florian Hense, European economist at Berenberg Bank in London. “The biggest risk facing the eurozone right now is political. Once that clears, we’ll see just how robust the recovery is.”

Sentiment in industry, services and construction improved in February, the report showed. A gauge for confidence among consumers slipped to a three-month low.

The resilience may be testament to the ECB’s unprecedented stimulus, which policymakers claim not only helped dissipate deflation risks, but also underpinned domestic demand. While President Mario Draghi argues the recovery remains fragile, facing risks from a protectionist US administration and Britain’s departure from the European Union, some of his colleagues are calling for a reassessment of the degree of support the economy needs.

The ECB holds its next policy meeting on March 9, when it will also present updated projections for growth and inflation.

Data on Thursday may show consumer prices in the region jumped 1.9% in February, the most in four years and in line with the ECB’s goal, while inflation stripping out volatile items such as food and energy was unchanged at 0.9%.

In Spain, the region’s fourth-largest economy, inflation accelerated to 3% this month, the highest level since late 2012.