Euro area Q2 GDP growth upwardly revised from flash estimate, IP growth contracts in Q2
Source: FxWire Pro - Commentary / 14 Aug 2018 15:55:03 America/New_York
Euro area second quarter economic growth was upwardly revised from its flash estimate. The GDP growth was revised by 0.1 percentage point to 0.4 percent sequential growth. The preliminary estimate had come in less than 1bb below the rounding range for 0.4 percent quarter-on-quarter.
The updated 0.4 percent quarter-on-quarter rate of second quarter matched the rate of first quarter, which was probably still above the economy’s potential rate in spite of representing a marked fall from growth of 0.7 percent in the third quarter and fourth quarter last year. The small upwards revision to second quarter GDP also saw the annual rate upwardly revised to 2.2 percent year-on-year, still respectable but 0.3 percentage point softer than in the first quarter.
However, the industrial production report released today showed a fall in production on a sequential basis in June. Production fell 0.7 percent sequentially in June, highlighting that the industrial sector represented the principal cause of the decelerated in economic output in the first half of 2018. Indeed, industrial production contracted for the second straight quarter in the second quarter, falling 0.2 percent after a fall of 0.6 percent in the first quarter, having increased at an average pace of 1.5 percent in the third quarter and fourth quarter of last year.
“And while the drop in production in Q2 was in no small part due to a sharp weather-related retreat in the energy sector, and we expect a return to growth in IP in Q3, surveys such as the Commission's and the PMIs, as well as orders data, point to a relatively subdued near-term outlook for the industrial sector”, noted Daiwa Capital Market Research in a report.
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