Euro area’s first quarter GDP growth’s final reading fully aligned with the prior estimates of 0.4 percent sequentially, which represented a notable loss of momentum from the rate of 0.7 percent from the fourth quarter of 2016 to fourth quarter of 2017. Out of the 17 member states, eleven recorded a deceleration tallying with the ECB’s assertion that the loss of momentum is widespread. But the expenditure breakdown had one bright spot.
On the contrary, private consumption recorded a strong rise of 0.5 percent, the steepest in three quarters. Fixed investment rose at the same rate – admittedly slightly weaker than the market consensus, this still left the annual rate accelerating by 0.4 percentage point to a strong 3.6 percent year-on-year.
However, inventories also contributed positively by 0.2 percentage point. However, the trade figures represented the biggest disappointment – after 20 straight quarters of growth in both categories, imports and exports dropped by 0.1 percent and 0.4 percent, respectively, so net trade negatively contributed 0.1 percentage point from headline GDP growth.
“Looking ahead, we expect that a similar composition of growth will be maintained in the current quarter. While private consumption should be supported by developments in the labour market, investment is unlikely to show a material acceleration given the recent deterioration in business sentiment”, noted Daiwa Capital Market Research in a report.
At 20:00 GMT the FxWirePro's Hourly Strength Index of Euro was slightly bullish at 63.1637, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -18.1881. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
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