BRUSSELS (dpa-AFX) - Consumer spending growth in Eurozone is likely to slow this year despite an improvement in consumer confidence, Stephen Brown, an economist at Capital Economics, said.
The consumer confidence index rose to -1.5 in August from -1.7 in July, data from the European Commission showed on August 23. Final Data is due on August 30.
Brown observed that the improvement in sentiment occurred despite a number of factors that could have weighed on sentiment across the region during the first few weeks of August.
'Not least the terrorist incidents in Spain and Finland, but also declines in euro-zone equities and the widening of the emissions scandal in Germany,' the economist added.
The rise in confidence mainly reflects the euro-zone's improving labor market, with the unemployment rate recently falling to an eight-year low of 9.2 percent.
Moreover, the confidence index is close to a historical high in August, consistent with annual household spending growth picking up to around 2.5 percent from 1.6 percent in the first quarter, the economist observed.
While the general economic outlook is bright and the labor market should continue to recover, it seems unlikely that consumer confidence will rise much from here, the economist cautioned.
Further, households' real income growth has slowed this year on higher inflation amid subdued wage growth.
'As a result, households might become less optimistic about the outlook for their personal finances in the coming months and we continue to expect annual consumer spending growth to ease from 2 percent in 2016 to 1.5 percent this year,' said Brown.
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