Eurozone indicators to be released in the coming week will show confidence is improving as a result of the easing of the euro but that inflation is climbing on high oil prices, economists said. "We expect moderate increases in the headline indicators," UBS economist Ed Teather said of German, French and Italian confidence indicators due out during the week.
Credit Suisse First Boston economists said of Germany's all-important IFO survey to be published on Tuesday: "German business confidence should continue to benefit from a weaker euro and the prospects of political change in July."
They said another rise in the IFO "would be a clearer sign of a turning point in business confidence" than anything seen to date.
HSBC economists said: "Economic sentiment in Germany seems to have stabilised in the last two months. As a result, an increase in the IFO survey in July from 93.3 to 93.9 seems likely."
The consensus forecast of economists polled by AFP's financial news unit AFX News is for an improvement in the IFO to 94.0.
The closely-watched Belgian business confidence indicator to be released on Tuesday will also post a further increase.
"The rise in the Belgian survey was the first major indicator pointing to an improvement in euro area economic sentiment in June, which was then reflected in other key indicators such as the German IFO and euro area PMIs," Credit Suisse First Boston economists said.
Equally, French business confidence and a key component in the index are forecast to rise.
Of overall eurozone sentiment, UBS's Teather said: "We looking for a similar outcome from the July euro area surveys of business and consumer confidence."
HSBC economists said of the report to be published on Friday: "In June, business confidence rose for the first time since October 2004, and there may be a further improvement in July given signs of continuing robust growth."
Credit Suisse First Boston economists agreed that while "business confidence should see another pickup this month reflecting that the weaker euro progressively leads to improved export prospects ... consumer confidence should remain unchanged amid subdued domestic demand and a sluggish labour market."
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