Eurozone businesses grew more optimistic about their prospects
in May, an indication that they may increase investment despite the
continued deadlock in negotiations between Greece and its creditors
that has raised fresh questions about the coherence of the currency
area.
Four months after taking power, Greece's left-wing government
has yet to seal an agreement on economic reforms with the rest of
the eurozone and the International Monetary Fund that would enable
it to repay its debts.
Speaking Wednesday in London, U.S. Treasury chief Jacob Lew said
it would be wrong to assume that a disorderly Greek exit from the
eurozone would be painless.
"No one should have a false sense of confidence that they know
what the risk of a crisis in Greece would be," Mr. Lew said in an
address to students at the London School of Economics.
During previous bouts of uncertainty about Greece's membership
of the eurozone, or the ability of other members to meet debt
payments, business confidence has suffered. That hasn't happened in
2015, an indication that the nation's troubles are so far having a
limited impact on the wider eurozone economy.
In its monthly survey of sentiment in households and businesses
across the currency area, the European Commission recorded a pickup
in confidence measures among manufacturers, service providers,
retailers and construction companies.
By contrast, consumers became slightly less optimistic about the
economic outlook and their job prospects during the month, but
remained more upbeat than they typically have been in the seven
years since the financial crisis erupted.
The commission's headline Economic Sentiment
Indicator—which aggregates the business and consumer
measures—was unchanged at 103.8, its highest level since
mid 2011 and well above the average of 100.0 going back to the
start of the series in 1990.
The resilience of confidence will come as a relief to policy
makers, who see weak investment as a key impediment to a faster
recovery in the eurozone, and fear that years of low growth as the
financial crisis morphed into the eurozone's own debt crisis has
made businesses and households less willing to take risks and
embark on long-term projects.
The surveys contained other sources of encouragement for the
European Central Bank, which in March launched a program of more
than one trillion euros in purchases of mostly government bonds
that is intended to raise inflation to its target of just below
2.0%.
The surveys found that consumers and service providers expect
prices to rise more rapidly over the next 12 months than they did
in April, while manufacturers expect the fall in prices to be more
modest.
Write to Paul Hannon at paul.hannon@wsj.com
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