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MNI (London)
Repeats Story Initially Transmitted at 16:34 GMT May 14/12:34 EST May 14
--EMU Q1 Preliminary GDP, March Industrial Production Data Due for Release Tues
by Jamie Satchi
     LONDON (MNI) - Eurozone economic growth slowed as expected in the first
three months of the year, according to EU statistics agency Eurostat. Flash
preliminary GDP data, published May 2, placed growth at 0.4% in Q1, sharply
lower than the 0.7% rises seen in the previous three quarters. Tuesday's data
will see the incorporation of the latest industrial production output as well as
GDP data from Germany. 
     Ahead of the release, we outline five themes we feel warrant particular
     --Analysts off in March. 
     Since 2001, median analyst estimates have failed to correctly predict
industrial production in the Eurozone, with a slight tilt towards
underestimating the number. Of the 17 estimates, 7 have been over-estimates with
March 2009 an over-estimate of 1.7 percentage points. On average, analysts
under-estimate the figure by 0.23 percentage points with the sum at 3.9
percentage points.
     --PMIs still signal Expansion. 
     All of the 'big four' European manufacturing sentiment PMIs lost ground in
March.  France and Germany saw notable drops with Germany falling from 60.6 to
58.2 and France falling from 55.9 to 53.7. Overall, this meant the Euro Area PMI
reflected this fall in manufacturing, dropping to 56.6 from 58.6. Worth noting
however is that 56.6 still represents robust growth, comfortably above the
50-neutral mark. 
     --First incorporation of German data into EMU GDP. 
     The preliminary flash estimate of EMU GDP did not include an official
estimate of German output growth over Q1, unlike France, Italy and Spain (see
below). Analysts estimate the German economy grew by 0.4% in the first quarter
of 2018, down from 0.6% in Q4 2017. The slowdown was likely initiated by
transitory factors: adverse weather weighing o construction output, the worst
influenza outbreak in 10 years which impacted production and services output and
worker strikes in January and February. 
     Euro area confidence Down in March. 
     Following a tough opening quarter confidence only found room to fall. From
115.1 in January, down from December's 17-year high, the European Commission
measure of headline economic sentiment fell to 114.4 in February and then 112.7
in March. The fact that the index held firm in April supports the idea that the
Q1 slide was largely temporary. Confidence in the industrial sector also fell in
March, from 8.8 to 7.0, but then went on to pick up in April, albeit marginally,
rising a tenth of a point to 7.1.
     --Producer prices on the up. 
     Growth in producer prices increased in March rose for the first time
November, rising 2.1% y/y. The data is non-seasonally adjusted and may have been
the result of shortages in key materials after the harsh weather or an uptick in
consumer demand. 
--MNI London Bureau; tel: +44 203-586-2225; email:
--MNI London Bureau; +44 203-586-2226; email:
MNI London Bureau | +44 203-865-3812 |