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Q1 GDP Still at +0.1%, Employment Growth Strengthens

EUROZONE DATA
MNI (London)

EUROZONE Q1 PRELIM GDP +0.1% Q/Q (= FLASH); Q4 (EA19) -0.1% Q/Q

EUROZONE Q1 PRELIM GDP +1.3% Y/Y (= FLASH); Q4 +1.8% Y/Y

EUROZONE Q1 FLASH EMPLOYMENT +0.6% Q/Q; Q4 +0.3% Q/Q

  • The preliminary eurozone GDP data (second estimate) showed the bloc expanded by +0.1% q/q and +1.3% y/y in Q1, unchanged from the initial flash data. This follows the -0.1% q/q contraction in Q4 GDP.
  • Detail on the main aggregates is due in the final release on June 8.
  • Q1 euro area employment grew by +0.6% q/q, accelerating from +0.3% q/q in Q4 and posting the strongest growth since Q4 2021/Q1 2022 (also +0.6%). With the eurozone unemployment rate edging down to a fresh record low at 6.5% in March, today's data signals continued labour-market resilience, despite soft GDP.
  • A tight labour market and low unemployment is in line with the ECB's macroeconomic projections, which see unemployment holding at around 6.6% throughout the projection horizon, assisted by ongoing labour supply shortages.
  • The ECB tightened policy for a seventh consecutive meeting in May, flagging "higher than anticipated increases in wages" as an upside inflationary risk in the medium term.

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