Europe’s Economy Dons Its Party Hat


Image source: IURII BURIAK /

What's going on?

Europe’s on a roll! German companies are feeling more confident in the economy than they have in over twenty years, while a recent survey has shown that jobs in the eurozone are being created at one of the fastest rates in a decade. It all suggests Europe is continuing its economic recovery.

What does this mean?

Firms based in the eurozone reported the second-largest jump in job growth since 2007, with particularly strong gains in the manufacturing sector. They’ve been steadily hiring more employees in order to catch up with backlogs of outstanding orders, which have kept on growing and growing this year! Overall, according to the survey, the growth of business activity is at a six-year high.

On top of that, a well-known survey of German companies reported that their confidence in the economy is at its highest level since the survey began in 1991! It attributed the “euphoria” to a steady stream of new orders for German manufacturers and the victory of business-friendly candidate Emmanuel Macron in the French presidential election.

Why should I care?

The bigger picture: Economic growth might turn out better than expected this quarter.

As they stand now, economists’ forecasts predict that the eurozone’s economy should grow by about 0.4% this quarter, roughly the same rate it’s grown in recent quarters. However, the economists who helped prepare Tuesday’s reports reckon their optimistic data suggests that Europe’s economy will grow significantly faster than the current forecast.

For markets: The euro is at a six-month high versus the US dollar.

The US dollar has wobbled against the euro in the past few months. On the one hand, investors have become more pessimistic that President Trump’s pro-growth proposals will be passed into law. On the other hand, Europe’s economy has started to grow even faster than America’s, which has pushed up international investors’ demand for the euro versus the dollar (as they need euros to get in on the action and buy euro-denominated stocks).

Originally posted as part of the Finimize daily email.

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