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Euro-Area Economy Steams Ahead As ECB Waits For Inflation

Published on Aug 1 2017 2:39 PM in Retail tagged: Economy / Euro / ECB

Euro-Area Economy Steams Ahead As ECB Waits For Inflation

The euro-area economy expanded apace in the second quarter, a sign the bloc’s upswing is becoming increasingly robust and self-sustaining.

Gross domestic product in the 19-country region rose 0.6 percent in the three months through June, after increasing 0.5 percent at the start of the year. That’s in line with the median estimate in a Bloomberg survey of economists.

Figures from economic confidence to joblessness and manufacturing output have signaled the economy was gaining steam, underpinning expectations by the European Central Bank that price pressures would eventually begin to build. Policy makers are preparing for a debate in the autumn about the future path of quantitative easing, which has helped reduce financing costs for firms and households, thus stimulating demand.

“The ECB expects solid, broad-based growth in the period ahead, and it’s pretty likely this will happen,” said Holger Sandte, chief European analyst at Nordea Markets in Copenhagen. “They will welcome these numbers but the focus will be on core inflation - whether it picks up and how fast.”

Market Growth

France enjoyed its strongest continuous expansion since 2011 in the second quarter, driven by exports and investment, while Spain experienced the fastest growth since 2015, national data published last week showed. The Austrian economy also gathered pace, while Belgium’s performance weakened.

A complete country breakdown will be available on Aug. 16, with details on GDP components due on Sept. 5.

One of the euro area’s main challenges was highlighted in a separate report on manufacturing. While a Purchasing Managers’ Index pointed to broad-based economic growth, price pressures showed further signs of easing in July.

In a sign of confidence in Europe’s largest economy, unemployment in Germany continued to decline last month, data on Tuesday also showed.

The euro was 0.2 percent weaker against the dollar at $1.1817 at 11:32 a.m. in Frankfurt.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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