Eurozone: Growth revives in Q1 thanks to solid household spending
June 6, 2019
A third estimate confirmed that the Eurozone economy gained traction at the start of the year, after a sharp slowdown in the second half of 2018. According to Eurostat, GDP increased a seasonally-adjusted 0.4% in Q1 from the previous quarter, above Q4’s 0.2% expansion. Q1’s reading was unchanged from the first two flash estimates.
A solid performance by the domestic economy largely drove Q1’s growth revival. Household spending growth picked up to 0.5% in Q1 (Q4: +0.3%), likely buttressed by falling unemployment and rising wages. Fixed investment growth was also solid at 1.1%, albeit below Q4’s 1.4%. Inventories, however, ate into growth substantially, while government consumption slid from a 0.6% increase in Q4 to a 0.1% expansion in Q1.
The external sector contributed positively to growth in the quarter, although the underlying picture was soft. Export growth halved to 0.6% in Q1, weighed on by the adverse external environment. Import growth also slowed from 1.2% in Q4 to 0.4% in Q1.
Compared with the same quarter of 2018, seasonally-adjusted GDP rose 1.2%, matching Q4’s reading.