MNI: Euro Area GDP Growth Holds Firm in Q2, Trade A Drag

--EMU Q2 GDP Growth +0.4% q/q vs +0.4% q/q Q1

By Jamie Satchithanantham

     LONDON (MNI) - Economic activity in the euro area rose 0.4% in the second

quarter of 2018, unchanged on the flash reading and in line with market

expectations, according to data published by Eurostat Friday.

     --GROWTH STEADY IN Q2

     Seasonally adjusted GDP grew by 0.4% in the euro area (EU19), steady versus

the previous quarter, confirming an ease in growth from 0.7% q/q in both the

third and fourth quarters of 2017. Over the same quarter a year ago, GDP rose by

2.1% in Q2, down from 2.4% in Q1.

     Across the wider European Union (EU28) growth also held firm at 0.4% q/q,

for a 2.1% rate on the year.

     --EXPENDITURE BREAKDOWN

     Supporting growth over the second quarter was gross fixed capital

investment an, to a lesser extent, household consumption. The former expanded

1.2% q/q to contribute 0.3pp to overall growth, while household consumption grew

0.2% q/q, accounting for an additional 0.1pp of quarterly growth.

     Offsetting this was net trade, which subtracted 0.2pp from quarterly

growth, with a 0.6% q/q rise in exports usurped by a 1.1% q/q rise in the flow

of goods entering the euro area.       

     --THE 'BIG FOUR'

     Across the euro area 'Big Four', it was Spain and Germany who put in the

best performances. The Spanish economy grew by 0.6% q/q in Q2, down a touch from

Q1's 0.7%, while growth in Germany nudged 0.1pp higher to 0.5%.  

     Growth in France and Italy, on the other hand, came in weaker with both

economies registering just a 0.2% expansion. That constituted the second

straight 0.2% outturn in France, and signalling a slowdown from the impressive

0.7% outturns recorded in the third and fourth quarters. In Italy, growth

slipped down to 0.2% from 0.3% in Q1.

     --MORE OF THE SAME

     Looking forward, the latest batch of PMI data, released by IHS Markit

earlier this week, were consistent with a further euro area GDP reading of +0.4%

in Q3. The August batch of surveys pointed to resilience across Germany and

France, a tentative weakening in Spanish activity but a more worrying,

broad-based moderation in Italian activity. 

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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