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Eurozone economic confidence climbs to new high in May

The economic confidence in the euro zone climbed to a six-year new high in May, thanks to never better consumer confidence, the European Commission said on Thursday.

The economic sentiment indicator in the 13-nation bloc sharing the same currency stood at 111.9 in May, the highest level since 2001, after it remained almost stable at 111.0 in April. The monthly indicator, based on business and consumer surveys, also rose by 1.3 points to 114.9 in the European Union. The surveys are conducted in different sectors of the economy, namely industry, services, construction and retail trade as well as consumers. Rising consumer confidence was the main driving force behind the improvement of the overall indicator, the European Commission said.

In May, consumer confidence increased markedly in both the euro zone and the EU, approaching an all-time high. In both areas, the indicator has been on a fairly steady upward path since the middle of 2005, which has become even steeper during the spring of 2007. In the euro zone, stronger economic confidence was also supported by improved views in the retail trade sector, while confidence in the other three sectors all declined by one point. Similar situation went with the EU, where only services confidence registered an increase, and the other sectors either remained stable or declined marginally.

At the individual country level, the picture was mixed, but a slight majority of countries showed an overall improvement in confidence. Germany, the largest economy in the 27-nation bloc, registered an increase of 0.9 point. The indicator increased sharply by 2.3 points in France and 3.7 points in Britain. Italy recorded a fall of 1.6 points. However, the business climate indicator for the euro zone declined slightly in May, the European Commission said in a separate report released today.

Managers' views on total order books, production trend observed in recent months, production expectations for the months ahead and stocks of finished products all deteriorated. The only component for which managers' assessment improved was export order books. But the indicator remained at a high level, pointing to strong industrial production growth in the Q2 of 2007, the commission said. (