Euro zone economic growth slows in first quarter

Manufacturing data also weaker, with France bucking trend

GDP in the euro zone expanded by 0.4 per cent in the first quarter compared to the last quarter of 2017.  Photograph: Bloomberg

GDP in the euro zone expanded by 0.4 per cent in the first quarter compared to the last quarter of 2017. Photograph: Bloomberg

 

Economic growth in the euro zone slowed as expected at the start of 2018, EU statistics agency Eurostat said in its preliminary flash estimate.

Gross domestic product (GDP) in the euro zone expanded by 0.4 per cent in the first quarter compared to the last quarter of 2017 and by 2.5 per cent year on year, Eurostat said on Wednesday.

This was in line with economists’ forecasts, but well below the 0.7 per cent quarterly rises seen in the previous three quarters.

Economic sentiment data slipped in March but remained broadly unchanged in April, leading analysts to forecast that the euro zone economy will ease back to still healthy growth levels of about 2 per cent year-on-year in the coming quarters.

However, it was unlikely to rebound to the 2.5 per cent expansion seen in 2017.

Confidence took a dip in part over concerns about a trade war with the United States, which could still be sparked if Washington imposes tariffs on steel and aluminium imports from the European Union. A decision on this is due by June 1st.

In a separate statement, Eurostat said unemployment in the euro zone was stable in March at 8.5 per cent.

Bright spot

Separate data from IHS Markit issued on Wednesday morning showed meanwhile a slowdown in manufacturing across a number of EU states, with France providing a welcome bright spot.

German manufacturing grew at the slowest pace in nine months in April, while growth in Spanish manufacturing eased to its slowest pace in seven months. Activity in French manufacturing however snapped a streak of three consecutive months of slower growth in April, suggesting the slowdown evident in the wider euro zone was less likely to turn into something worse. – Reuters