Eurozone GDP back to pre-2008 crisis level, unemployment falls, inflation downComments
There was mixed news for the eurozone on Friday
We learned that the bloc’s economy grew at its fastest pace in five years in the first quarter, while unemployment declined but inflation fell.
GDP expanding 0.6 percent – better than the forecast 0.4 percent – taking it above the level just before the financial crisis eight years ago.
That was more than both the US (0.5 percent) and Britain (0.4 percent) in the same quarter.
Annual eurozone growth held steady at 1.6 percent, more than three times the US rate for that period.
Euro area GDP +0.6% in Q1 2016, +1.6% compared with Q1 2015 #Eurostathttps://t.co/QWfttA4QF0pic.twitter.com/YZHQRUeXzv— EU_Eurostat (@EU_Eurostat) April 29, 2016
Spain performed even better than predicted with its economy expanding 0.8 percent between January and March.
The services industry picked up towards the end of that quarter, however consumer confidence is weakening and there are signs businesses are investing less.
French growth also accelerated more than expected at the start of the year – up 0.5 percent.
Consumer spending there saw its strongest increase since 2004 and business investment rose.
Those two countries are still bedeviled by high unemployment – 21 percent and 10.5 percent respectively – but the jobless total for the eurozone dipped to the lowest in over four years. It was 10.2 percent of the region’s workforce in March, down from 10.4 percent in February.
Mar 2016: euro area unemployment rate 10.2% (Feb 10.4%), EU 8.8% (Feb 8.9%) #Eurostathttps://t.co/nqLI850gmYpic.twitter.com/3xGxGLhYIV— EU_Eurostat (@EU_Eurostat) April 29, 2016
However, the return of deflation underlines the challenge for the European Central Bank as it struggles to boost prices. Inflation was down 0.2 percent in April even after the ECB unveiled fresh stimulus in December and March in hopes of boosting inflation.
Perhaps more worrying for policymakers, core inflation, which excludes volatile energy and food prices, also slowed, raising fears that low energy prices are feeding into the price of other goods and services, something the ECB is especially concerned about.
Euro area inflation down to -0.2% in Apr 2016 (0.0% in Mar): flash estimate from #Eurostathttps://t.co/xDaHXTmxf5pic.twitter.com/lkvHfeFjrg— EU_Eurostat (@EU_Eurostat) April 29, 2016