Buoyed by falling unemployment, rising equity prices and a boost to their spending power from a lower oil price, euro-zone consumers have become increasingly confident, with the EC’s measure of consumer sentiment rising in March to its highest level since the summer of 2007.
This bodes well for a revival in the euro-zone’s consumer sector in the next couple of quarters and suggests that annual household spending growth may well accelerate further from Q4’s 1.4%. We think private consumption will rise by around 2.0% this year and 1.5% in 2016, providing some much-needed support to the region’s overall economic recovery.
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