Eurozone strengthens as growth picks up and unemployment hits 10-year low - as it happened
Eurozone economy grew by 0.4% in the last quarter, faster than expected, as Italy escaped its third recession in a decade
- Summary: Eurozone growth impresses
- Italy: Recession is over
- Eurozone unemployment lowest since Lehman Brothers failed
- Eurozone beats forecasts with 0.4% growth
Earlier:
- Spain grew by a punchy 0.7% in last quarter
- France: grew by 0.3%, but net trade contracted
- Introduction: Eurozone GDP day
6.13pm BST
And finally... European stock markets ended the day in the green, thanks to better-than-expected growth figures.
Spain's IBEX gained 0.5%, after its growth race accelerated to 0.7% - quite pacy by European standards.
Whilst this is clearly a well needed win for the Italian coalition government, the long-term picture is still shaky at best; Italy remains the sick dog of the eurozone. Investors were willing to look beyond this today.
The FTSE MIB jumped higher following the release. The Italian index is leading the charge in Europe up over 0.4%.
6.09pm BST
Back on Wall Street, Alphabet investors have singed fingers after watching the stock plunge over 8%.
More than $70bn has been wiped off its value, in the biggest one-day drop since 2012.
Related: Google share price plunges, wiping $77bn off its market value
2.55pm BST
Time for a quick recap
Europe's economy may be turning a corner, following a blizzard of economic data today.
2.55pm BST
In other corporate news, General Electric has cheered Wall Street with results which could have been worse....
General Electric has fallen so hard that Wall Street is relieved its industrial businesses only burned $1.2 billion of cash during the first quarter.
Shares of GE(GE) climbed 7% in premarket trading on Tuesday after the company reported profit and revenue that exceeded forecasts. Wall Street is betting the company's recovery remains intact.
2.43pm BST
Ouch! Shares in Alphabet have taken a mighty tumble at the start of trading in New York.
Alphabet plunges at the open, worst intraday loss since 2012 https://t.co/KhCaXS5LBQ pic.twitter.com/JFZk1BASIE
2.25pm BST
Meanwhile in America, house price growth has hit its lowest rate in around seven years - perhaps a sign that recent interest rate hikes have cooled the market.
Home prices in 20 U.S. cities rose in February at the slowest pace since 2012, decelerating for an 11th straight month https://t.co/EG1QPIjfLC pic.twitter.com/q70CzJ9UEd
There's no more double-digit price gains among the components of the Case-Shiller 20-city house price index https://t.co/CijjE5L5OM pic.twitter.com/JAPGJTWUUo
2.21pm BST
Canada's February contraction confirms that the country's growth outlook is bleak, says Simon Harvey, FX market analyst at Monex Europe.
He points out that Canada's mining sector is struggling:
"The sixth consecutive decline in the natural resources sector evidences that the spill over effects from the rout in Q4 2018 are yet to fade.
Mining output declined by 4.4% in February while oil & gas extraction fell 0.6%, but February may show the end of the decline as investment is expected to increase amid firming commodity prices.
2.09pm BST
Newsflash: Mexico's economy has also suffered a contraction.
#Mexico #GDP Growth Rate QoQ Prel at -0.2% https://t.co/jZz1k45nzz pic.twitter.com/uRjj0GVuRo
1.45pm BST
Newsflash: Canada's economy has weakened, bucking the stronger data out of Europe today.
#Canadian GDP figures confirming the sluggish start to the year, economy contracted in Feb$USDCAD popped higher post-release, now back where it started
CANADA GDP (YOY) ACTUAL: 1.1% VS 1.6% PREVIOUS; EST 1.4%
CANADA GDP (MOM) (FEB) ACTUAL: -0.1% VS 0.3% PREVIOUS; EST 0.1%
#Canada #GDP month-on-month at -0.1% https://t.co/3lZfCVUTCg pic.twitter.com/nrgCVtGMgp
1.33pm BST
Over in America, fast food chain McDonalds has beaten Wall Street sales forecasts, as recent menu changes prove a winner with customers.
The company attributed the U.S. same-store sales beat to its promotions, which included a Bacon Event, Donut Sticks, and the 2-for-$5 Mix-and-Match promo.
*MCDONALD'S 1Q EPS $1.72, EST. $1.75
*MCDONALD'S 1Q REV. $4.96B, EST. $4.93B
*MCDONALD'S 1Q US COMP SALES +4.5%, EST. +3%$MCD +2.3% premarket pic.twitter.com/uEPveDlaTN
12.43pm BST
Ana Andrade, research analyst at The Economist Intelligence Unit, reckons the eurozone economy still needs support - so don't expect the European Central Bank to raise interest rates anytime soon!
She writes:
At the ECB's last meeting Mario Draghi showed that the bank's toolkit could be adjusted to tackle a potential severe economic downturn. The ECB signalled it was ready to go "low for longer" or even further cut rates if the euro zone headed into a recession. If the flash estimate for Q1 is confirmed at 0.4% there should be no need for this.
Nevertheless, we continue to expect TLTROs [new cheap loans to banks] in very favourable terms and no hike this year as inflationary pressures remain low.
12.32pm BST
PwC have helpfully drawn up this chart, showing how Spain has posted a strong recovery since the debt crisis, but Greece has really struggled:
The national breakdown of the data showed the Italian economy grew in the first quarter of this year putting an end to its 6th recession in the 21st century. For France, even though output expanded by a respectable 0.3% on a quarter-on-quarter basis it was less strong than expected. However, we expect the recent tax cuts announced by the French authorities to sustain demand in the short-term, assuming households continue to spend rather than save.
Finally, Spain continued to defy expectations growing at a rate of 0.7% quarter-on-quarter in line with its post Eurozone crisis average rate. The figure below shows that Spain's GDP in level terms is now around 16% higher compared to the low it struck during the Eurozone crisis. This is the second best performance when compared to other peripheral economies, with sunny Cyprus managing to outperform others growing its economy by about 18%.
12.09pm BST
Nancy Curtin, CIO at Close Brothers Asset Management, strikes a cautious note -- Europe's economy is improving, but it's hardly booming.
"Eurozone GDP figures may have provided a positive surprise for investors, but its economy is far from out of the woods. In reality, growth is still pretty anaemic, and the Eurozone's export-led economy remains vulnerable to any global slowdown. But things are looking up; Chinese stimulus should turn into a tail wind for the region, supporting positive trends in wage growth and employment.
Should economic growth run out of steam once more, rather than picking up speed, a fiscal intervention or further monetary policy changes may be deemed necessary."
11.48am BST
Pictet's Nadia Gharbi points out that 2018 was a year to forget for Italy - at least 2019 has started better.
Italian GDP rose by 0.2% q-o-q in Q1, emerging from recession. This was the fastest GDP growth rate since Q4 2017. No GDP breakdown available (to be published on May 31).
Based on Istat info it seems that net exports contributed positively to GDP growth pic.twitter.com/HHZnBCZDca
A decent data for Italian GDP: +0.2% in Q1 after recession in H2. But:
1) Istat said that Domestic demand was a drag on growth for the third consecutive quarter,
2) Italy remains the laggard among the eurozone countries.. pic.twitter.com/AgPD8btWx4
11.19am BST
Italy's farms, factories and service sector companies all made a positive contribution to growth in the last quarter, Istat says.
Net exports also boosted growth, which is an encouraging signal.
11.15am BST
In another boost to the eurozone, Italy has returned to growth after its third recession in a decades.
Italy Q1 preliminary GDP +0.2% vs +0.1% q/q expected https://t.co/bZacGKzKXT pic.twitter.com/6Nl0Eqd7KZ
11.03am BST
Newsflash: Italy has escaped recession! More to follow....
11.00am BST
Europe's economy has been through some tough times recently, thanks to Brexit, the US-China trade war, political clashes between Italy and Brussels, and a downturn in Germany's factory sector (particularly auto markets).
But today's data suggests the eurozone will avoid being dragged into recession, as some feared.
BREAKING
1) Short thread on European economic data published at 10am.
Despite the year-old economic slowdown, unemployment across the EU continues to fall and is closing in on 6% - a new 21st century low. Eurozone close to record low. pic.twitter.com/xPn1TNdqea
2) Unemployment varies a lot across the EU, even if it is trending downwards everywhere. As of early 2019, Greek joblessness still highest at 18.5% and Czech lowest at 1.9%.
Usual reminder, 13 countries have a lower rate than Ireland, so less of the 'full employment' talk please. pic.twitter.com/qjcgr3iAY7
3) 16 million people unemployed across the EU as of March, compared to 6m in US. Spain's has the highest in absolute terms, at 3.2m, and second highest rate among the EU28 (14%).
Rates and raw numbers here by country pic.twitter.com/jgt3000L2G
4) Also out today are GDP data for the first quarter of 2019, and they are pretty good.
Growth in both EU and eurozone accelerated, after slowing quite a bit in the second half of 2018. That is looking more like a soft patch than a slide into recession, but too early to be sure. pic.twitter.com/bJsKRpTZ9L
10.47am BST
Germany's growth report won't be issued for a couple of weeks. But today's date implies that Europe's largest economy has posted solid growth in the last quarter - perhaps 0.4%, or even faster?
And judging from the available country data, Eurozone flash and monthly German data, my current estimate of 0.4% QoQ GDP for Germany in Q1 even looks somewhat pessimistic....
10.45am BST
The euro has risen to its highest level in nearly a week, on the back of today's jobs and growth figures.
The single currency has gained a third of a cent to $1.122, as investors conclude that the eurozone is stronger than thought.
The Euro jumps above 1.12 (1.1213) against the US dollar soon after Eurozone better-than-expected macroeconomic data. Forex traders have come back to the "buy" side on #EURUSD@graemewearden
10.42am BST
Unemployment across the wider European Union has fallen to 6.4% -- the lowest since Eurostat started keeping data in January 2000.
The statistics body says that almost one and a half million people stopped being unemployed in the last year:
Eurostat estimates that 15.907 million men and women in the EU28, of whom 12.630 million in the euro area, were unemployed in March 2019. Compared with February 2019, the number of persons unemployed decreased by 172 000 in the EU28 and by 174 000 in the euro area.
Compared with March 2018, unemployment fell by 1.430 million in the EU28 and by 1.172 million in the euro area.
10.37am BST
In another boost, unemployment across the eurozone has hit its lowest level in over a decade.
The eurozone jobless rate fell to 7.7% in March, Eurostat reports. That's down from 7.8% in February, and the lowest recorded since the financial crisis in September 2008.
10.23am BST
Financial experts are welcoming the pick-up in eurozone growth in the last quarter.
Fred Dukrozet of Swiss private bank Pictet points out that the current recovery has now lasted six years:
Bend, but not Break. Euro area real GDP up 0.4% QoQ in Q1, above expectations and much stronger than implied by PMIs.
We're 6 years into this uneven expansion cycle facing several headwinds and downside risks, yet much more resilient than before. pic.twitter.com/7HMtBxr3ML
The eurozone economy rebounded in the first three months of the year, and more strongly than had been expected. GDP was up 0.4%, double the prior rate of growth, an annualized 1.5%. So back to where it was in the first half of 2018, but nowhere near its 2017 peak.
10.11am BST
European policymakers will like the look of this chart - showing how growth is rising again after some tough quarters.
10.08am BST
On an annual basis, the eurozone grew by 1.2% in the last year while the EU grew by 1.5%.
10.07am BST
The wider European Union also accelerated in the last quarter.
The EU grew by 0.5% in January-March, new figures from Eurostat show, up from 0.3% in the fourth quarter of 2018.
10.00am BST
Boom! The eurozone grew by 0.4% in the first quarter of 2019.
That's stronger than expected, and twice as fast as the 0.2% growth recorded in the final three months of 2018.
9.57am BST
European stock markets are bobbing rather aimlessly today, despite the pick-up in growth in Spain.
The French, German and UK markets are all slightly in the red, as the slowdown in China's factory growth overnight dampens the mood. Last night's underwhelming results from Alphabet is also weighing on shares.
9.50am BST
Looking beyond the eurozone to Asia, we have disappointing growth figures from Taiwan.
Taiwan economy stumbles as global tech downturn worsens https://t.co/Rx3sgIwEGa
9.18am BST
We don't get any German growth data today, unfortunately. Instead, Europe's largest economy has just posted a big fall in unemployment.
#Germany #Unemployment Change at -12K https://t.co/SnKnEyrGsg pic.twitter.com/eEm1FX5u1a
9.02am BST
Austria's growth rate has dipped, to 0.3% in January-March from 0.4% in October-December 2018.
#Austria #GDP Growth Rate QoQ Flash at 0.3% https://t.co/pAKTuooPJW pic.twitter.com/FujjbfEr0z
While household and public consumption expenditure held up nicely, each rising by 0.4% quarter-on-quarter, exports and imports lost momentum. The cooling world economy and especially the cooling of the European industrial economy has started to leave its mark on Austria.
Although imports rose moderately (+0.4%) in line with investment demand, exports expanded to the same extent, resulting in hardly any contribution to GDP growth in the first quarter.
#Austria: Solid growth and pockets full of money? | Snap | ING Think - GDP growth for the first quarter of 2019 came in at 0.3% quarter-on-quarter, slightly lower than in the final quarter of 2018. Domestic demand is likely to rema... https://t.co/830bOedeRd
8.58am BST
Bloomberg is also cheered by the jump in Spain's growth rate, calling it an encouraging sign for European growth.
Spain's economy unexpectedly picked up pace, adding to signs that a slowdown in the euro area may be on the verge of turning.
Spain has consistently outgrown the 19-country region since the start of 2018 and expanded 0.7 percent in the first quarter. A gradual fall in unemployment and higher wages have given a sustained boost to consumer spending, a motor of the Spanish economy, offsetting weaker export demand.
8.52am BST
Getting back to the growth figures...and this chart shows how Spain's economy has now been steadily growing since 2014:
That's a handsome chart in terms of healthy contributions, although partially flattered by a decline in imports. pic.twitter.com/WY1RssjD1i
8.51am BST
UK hotel chain Whitbread is also under pressure this morning, after warning the Brexit uncertainty is hurting its Premier Inn business.
In the fourth quarter, we saw a decline in business and leisure confidence, leading to weaker domestic hotel demand. This weakness has increased into March and April particularly in the regional business market, coinciding with an acute period of political and economic uncertainty in the UK. At this stage in the new financial year it is too early to know how business confidence and its impact on the market will evolve.
8.39am BST
In the City, shares of mining companies have fallen after China's factory growth unexpectedly stalled last month (see 7.34am).
Coal and iron ore giant Glencore are the biggest faller, down 3%, with BHP Group and Rio Tinto both shedding 1.5%.
8.24am BST
The pick-up in Spain's growth rate is a positive signal for Europe's economy, say financial analysts.
Here's Simon Harvey of Monex Europe:
Nice positive surprise in some Eurozone data. Spains flash Q1 GDP reading surprises to the upside at 0.7% (F:0.6%). Still have German CPI and EZ GDP to come today, but signs from Saxony and Spain suggest things aren't as bad as they're made out to be... pic.twitter.com/jc7cgusX6l
Pretty satisfying EZ data so far...France GDP 0.3% vs. 0.3% | Spain GDP 0.7% vs. 0.6% | GFK (Germany) 10,4 vs. 10,3 ... #Eurozone #EURUSD
Couple of decent signs in #eurozone data this morning - will see whether this follows through to GDP at 10am.
Market is heavily short $EUR and priced for a negative outcome, risks point to the upside for $EUR
Spain q/q GDP 0.7% v 0.6% exp.
France y/y GDP 1.1% as exp.
8.11am BST
Newsflash: Spain's economy has accelerated in the last quarter, growing more than twice as fast as France.
7.45am BST
Given today's data, French and Chinese manufacturers will both be hoping for a trade war breakthrough soon.
US officials have landed in Beijing today for fresh talks to end the dispute that has led to tariffs on hundreds of billions of dollars of exports.
"We're looking forward to productive discussions over the next few days."
7.34am BST
Overnight, some disappointing Chinese manufacturing data has undermined hopes that the global economy was picking up.
According to April PMIs, China's rebound was short-lived (manuf in white, non-manuf in blue). Detail shows deterioration in virtually all components (manuf export orders is a notable exception). pic.twitter.com/pX69cbjhvM
7.18am BST
Although any growth is welcome, a 0.3% quarterly growth rate is rather mediocre.
And as Philippe Waechter, chief economist at Ostrum Asset Management points out, French GDP has now been subdued for over a year.
The French #GDP quarterly change was at 0.3% in the 1st quarter, marginally lower than in the 2 previous quarters.The French growth trend is close to 1.2%. Domestic demand (0.3 vs 0.2 in 4Q18)was up,inventories (0.3 vs -0.1)were stronger but net exports were negative(-0.3 vs 0.3) pic.twitter.com/zhLkLlomi6
7.09am BST
Some snap reaction:
'No turning point' for the Eurozone economy on the horizon says Lorenzo Cordogno LC Macro Advisors. @SquawkBoxEurope Despite French Q1 GDP showing better consumer spending but flat Q/Q growth at 0.3%.
7.08am BST
This chart illustrates how the halt in French export growth dragged its economy back in the last quarter (the green bar).
7.02am BST
More encouragingly, French household spending grew by 0.4% in the last quarter (having flatlined in October-December). That suggests that consumer confidence might be picking up.
French businesses also kept investing in new equipment and facilities -- this 'gross fixed capital formation' rose by 0.3% (down slightly on the previous quarter).
6.57am BST
Digging into France's GDP report a little, it's clear that the slowdown in global trade has hurt companies.
Export growth almost ground to a halt in the first three months of 2019, rising by just 0.1% (from 2.2% growth in Q4 2018). Imports also slowed, to 0.9% from 1.2% in Q4 2018.
6.44am BST
Newsflash: France has got GDP Day up and running by reporting another quarter of growth.
6.27am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today we learn whether Europe's economy is still stuck in a rut, when new GDP figures from across the single currency region are released.
Related: Alphabet: Google parent company's shares drop after latest earnings report
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