FX.co ★ Eurozone GDP Rises 0.3% As Estimated

The euro area economy maintained its steady growth pace in the second quarter, according to initial estimates released by Eurostat on Wednesday.

The region’s Gross Domestic Product (GDP) increased by 0.3% over the three-month period ending in June, mirroring the growth observed in the first quarter and aligning with the preliminary estimate published on July 30.

On an annual basis, economic growth improved to 0.6%, consistent with the earlier estimate and up from 0.5% in the first quarter.

Similarly, the European Union (EU27) also experienced a stable quarterly growth of 0.3% in the second quarter. Annually, growth accelerated to 0.8% compared to 0.6% in the previous quarter.

Today's data revealed that employment increased by 0.2% sequentially, slightly lower than the 0.3% growth seen in the prior quarter. Annually, employment growth slowed to 0.8% from 1.0% in the first quarter.

Eurostat is scheduled to release revised estimates for the second quarter on September 6.

In a separate report, Eurostat indicated that industrial production declined for the third consecutive month in June, providing no positive contribution to economic growth for the quarter.

Industrial output unexpectedly fell by 0.1% in June, following a 0.9% decline in the previous month. Economists had anticipated a 0.4% increase.

The monthly decline was primarily driven by a 2.5% drop in non-durable consumer goods, while all other main industrial sectors saw growth from May.

Year-over-year, the decline in industrial production worsened to 3.9% from 3.3%.

Bert Colijn, an economist at ING, noted that the short-term potential for GDP growth is limited and heavily reliant on the performance of the service sector. "Given recent data casting doubts on the strength of the service sector, expectations for GDP growth for the remainder of the year have diminished," remarked Colijn.

In July, the European Central Bank (ECB) left its key interest rates unchanged, following a rate cut in June, the first in five years. The bank is widely expected to reduce rates again in September as the economic outlook remains challenging.

Andrew Kenningham, an economist at Capital Economics, suggested that during their next meeting on September 12, policymakers will be particularly attentive to the latest inflation and wage data. He anticipates a 25 basis point cut in the deposit rate to 3.5%.