Euro area economy expands strongly in Q4 2017

The second flash estimate of euro area’s fourth quarter 2017 data was released today. The Initial estimate of a growth of 0.6 percent quarter-on-quarter was affirmed, which certainly represented a strong rate; however a shade weaker compared to the earlier two quarters and lower compared to what most major economic confidence surveys had suggested, noted Daiwa Capital Markets Research in a report.

On an annual basis, the euro area economic growth declined a bit to 2.7 percent, but this was still the second-highest reading since early 2011, with today’s prints making the end of a very successful year for the euro area economy, with growth surpassing expectations.

The ECB forecast for the full year growth was 1.7 percent. A considerable part of that success story was a rebound in global trade and manufacturing momentum that the currency bloc advanced from. Indeed, today industrial production data implied that industrial output grew 0.4 percent sequentially in December to leave output 5.2 percent higher year-on-year. Over the past three months, output has risen 1.3 percent, affirming that industrial production continued underpinning the economic growth in the fourth quarter.

In the meantime, equivalent prints from Italy brought a surprise on the downside, while it also indicated that growth eased slightly at the end of 2017. Following a 0.4 percent sequential rise in the third quarter, GDP rose 0.3 percent in the fourth quarter, which matched the average pace in the last two years. For the whole of 2017, Italian economic output rose 1.5 percent, the best performance since 2010.

At 20:00 GMT the FxWirePro's Hourly Strength Index of Euro was highly bullish at 123.86, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -110.638. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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