Eurozone Q1 Growth Weakest Since 2016

The latest Eurostat GDP estimate shows that the eurozone economy expanded as initially estimated in the first quarter of this year. The same figures showed that growth during the review period was the weakest since mid-2016.

GDP for the countries that share the euro currency grew by 0.4% sequentially in the first quarter, slower than the 0.7% expansion seen in the previous quarter. This growth rate was, however, in line with the estimate released on May 15, MNA reported.

On a yearly basis, GDP growth slowed to 2.5%, as estimated, from the 2.8% seen in the previous quarter. The report highlights the eurozone’s underwhelming start to 2018, with second quarter data for the region also showing signs of weakness.

Meanwhile, activity in the British service sector picked up at the fastest rate in three months in May, continuing to recover from March’s low, according to a closely watched business survey by research firm Markit. The country’s services purchasing managers’ index rose to 54.0 in May from 52.8 in April, compared to forecasts for a reading of 52.9. This reading signaled a strong upturn in overall business activity across the service economy.

Firms cited a catch-up from an exceptionally cold winter, alongside sustained growth of incoming new work. But new business volumes continued to rise relatively slowly, with firms noting that Brexit-related uncertainty remained an important factor holding back decision-making among clients. Simultaneously, tight labor market conditions placed upward pressure on wages and difficulties to recruit skilled personnel.