The European Commission has reported that the euro zone economy has picked up in the first three months of the year, but the EC remains cautious.
In its monthly report, the EU executive pointed to mixed signals from business surveys and said the underlying strength of the economy should not be overestimated.
After rising just 0.2% in the final three months of last year, the EC said improving domestic demand meant the euro zone economy has grown by 0.5% so far this year and could improve by up to 0.7 in the 2nd quarter.
The EC’s Director-General for Economic and Financial Affairs, Klaus Regling, also sounded a cautionary note on oil. He said: “Demand for oil continues to grow strongly, particularly from China and India. There is relatively little spare supply capacity and there is therefore a risk of further rises in the event of a supply or demand shock.”
Regling was upbeat on the strength of domestic – as opposed to export – demand.
He said retail sales in the euro zone went up by 0.3% in January and February, providing some hope for continued growth in private consumption.
But the European Commission admitted the jump in consumer spending at the end of last year “may overstate its underlying strength.”