Eurozone GDP Growth Gains Momentum In Q1
29 April 2016 - 10:25AM
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Euro area economic growth doubled in the first quarter
weathering fears of a global slowdown and the jobless rate declined
for the first time in three months in March to its lowest level in
four-and-a-half years.
Nonetheless, Eurozone relapsed into deflation in April on
negative contributions from oil prices.
Gross domestic product climbed 0.6 percent from the prior
quarter, following a 0.3 percent rise in the fourth quarter,
preliminary flash estimate from Eurostat showed Friday.
Growth was also faster than the expected pace of 0.4 percent. A
similar faster expansion was last seen in the first quarter of
2015.
On a yearly basis, GDP growth remained at 1.6 percent, defying
expectations for an easing to 1.5 percent.
Today's data provided only flash estimates for headline numbers.
Eurostat is set to publish flash estimate on May 13.
Commerzbank analyst Christoph Weil said the strong plus is
partly due to special factors like calendar effects and the mild
winter. Amid the solid economic data, the ECB is unlikely to
further loosen monetary policy for the time being.
It is unlikely that the Eurozone will be able to sustain this
growth rate in the second quarter, IHS Global Insight economist
Howard Archer said.
The risk of recurrent terrorist attacks and the possibility of
the UK voting to leave the EU in June's referendum are also
uncertainties that could impact on Eurozone growth, Archer
noted.
Among major euro area member countries, only France and Spain so
far published quarterly national accounts.
Driven by a rebound in household spending, the French economy
expanded at a faster pace of 0.5 percent in the first quarter. It
was followed by a 0.3 percent expansion in the previous
quarter.
At the same time, Spain's economic growth held steady at 0.8
percent in the first three months of this year, while economists
expected it to slow slightly to 0.7 percent.
The EU28 GDP expanded 0.5 percent sequentially in the first
quarter and by 1.7 percent from the same period of last year.
Another report showed that the unemployment rate dropped to a
seasonally adjusted 10.2 percent in March, the lowest figure since
August 2011, when it was the same. In July that year, the rate was
10.1 percent.
The February jobless rate was revised up to 10.4 percent from
10.3 percent. The number of unemployed decreased 226,000 to 16.44
million in March.
The youth jobless rate, which applies to those below 25, eased
to 21.2 percent from 21.7 percent in the euro area.
Despite a fall in unemployment, euro area consumers clearly
won't enjoy the same boost to their spending power from falling
inflation in the coming quarters that they have over the last year
or so, Jonathan Loynes at Capital Economics said.
According to the flash estimate, the currency bloc slid into
negative inflation again in April, with the harmonized consumer
price index falling 0.2 percent annually, after staying flat in
March.
Prices had declined 0.2 percent in February. Economists had
forecast a 0.1 percent drop for April.
Headline inflation has been below the European Central Bank's
target of 'below, but close to 2 percent' since early 2013.
Policymakers are desperate to return inflation back to their
mandate.
Excluding energy, food, alcohol and tobacco, core inflation
eased to 0.8 percent from 1 percent in March. The figure was also
below the expected rate of 0.9 percent.
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