Euro zone economic growth rebounded in the first quarter on household consumption and exports, data showed this morning.
The European Union's statistics office confirmed its earlier estimate that growth in the 12 countries using the euro was 0.6 per cent quarter-on-quarter in the first three months of the year, up from 0.3 per cent in the last quarter of 2005.
In year-on-year terms, the euro zone economy expanded 1.9 per cent in the first quarter, close to its potential growth rate of around 2 per cent as estimated by the European Commission.
The first-quarter rebound was driven mainly by a surge in household consumption, which increased 0.7 per cent quarter-on-quarter, and a positive contribution from trade as exports rose 3.1 per cent and imports gained 2.5 per cent.
Private consumption has long been the biggest drag on growth as households' spending power was curbed by high oil prices and confidence undermined by persistently high unemployment.
But Eurostat data showed today the jobs picture was improving. Unemployment in the euro zone stood at 8 per cent of the workforce in April, unchanged from a downwardly revised March figure and below market expectations of 8.1 per cent.
The data showed a 0.5 percentage point decline in the jobless rate in the euro zone's biggest economy, Germany, to 8.2 per cent in April and 0.1 percentage point declines in France, Austria, Finland and the Netherlands.
European Commission consumer confidence surveys for April and May have shown a one-point improvement in sentiment among households in both months.
The commission raised its growth forecasts for the second and third quarters to a range of 0.5 to 0.9 per cent quarter-on-quarter, up from the 0.3-0.8 and 0.2-0.8 percent respectively it projected on April 12th.
In the last quarter of this year, quarterly growth should accelerate to 0.4-1.0 per cent, the commission said.
On May 8th, the commission raised its full-year growth forecast for the euro zone by 0.2 percentage point to 2.1 per cent, up from 1.3 per cent growth in 2005.