Chart of the week

After slowing significantly in the second half of 2018, Eurozone first-quarter 2019 growth jumped 1.5% on an annualised basis, beating both analysts’ expectations and the level suggested by PMI1 surveys (1%). Details on the various growth components underlying these preliminary Eurostat estimates will be published on June 6th.

Broken down by country, French growth slipped slightly (1.2% versus 1.4% previously), Italy exited its technical recession (0.9% versus -0.4% previously) and Spain’s growth accelerated (3.0% versus 2.2% previously). Germany’s figures have not yet been published but data from other European economies are pointing to overall first-quarter growth of approximately 1.5%, after a nearly flat fourth-quarter 2018.

OUR ANALYSIS

Eurozone growth appears to be returning to normal following a disappointing second-half 2018. Some one-off factors helped: in Germany, favourable weather conditions boosted construction projects while in Italy, the statistics office indicated that domestic demand had dragged on growth, suggesting that the recent improvement may only be temporary. Despite this, the rebound in Eurozone growth is reassuring.

(1) PMI : PMI indices are confidence indicators that summarize the results of surveys conducted among company purchasing managers. A value greater than 50 indicates a positive sentiment in the sector concerned (manufacturing or service)

(2) GDP : main economic indicator for measuring economic production within a given country

The opinion expressed above is dated May 3, 2019, and liable to change.

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