The eurozone’s gross domestic product (GDP) grew by a better-than-expected 0.3% in the second quarter of 2024, but Germany’s GDP contracted by 0.1%, underscoring the region’s biggest economy’s economic woes.
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Eurozone economic growth in the second quarter of this year was faster than expected, preliminary data released by Eurostat on Tuesday showed.
The euro area’s gross domestic product (GDP) grew at an annual rate of 0.3% in the second quarter of 2024, matching the growth rate in the first quarter. This exceeded the expected 0.2% increase and indicated a slightly faster recovery than expected. The growth rate for the European Union as a whole in the second quarter was also 0.3%, maintaining the same pace as the first quarter.
Among Member States with available data for the second quarter of 2024, the highest quarterly increase was in Ireland (+1.2%), followed by Lithuania (+0.9%) and Spain (+0.8%). did. The largest declines were seen in Latvia (-1.1%), Sweden (-0.8%) and Hungary (-0.2%).
However, Germany, the eurozone’s largest economy, unexpectedly contracted by 0.1% on a quarterly basis in the second quarter of 2024. This was a reversal from the 0.2% growth in the first quarter and below the 0.1% increase expected based on preliminary data. From the Federal Statistical Office. As the industrial sector remained under pressure from high interest rates, investment in equipment and buildings declined significantly.
Economic growth in France was slightly stronger than expected, with preliminary INSEE figures showing second-quarter GDP growth of 0.3%, in line with the upwardly revised first-quarter growth of 0.2%. exceeded. Domestic final demand (excluding inventories) contributed positively to economic growth in the quarter (+0.1% after -0.4%) due to a slight recovery in gross fixed capital formation (+0.0 points in Q1 2024) after +0.1 points). Household consumption remained strong this quarter (0.0% after -0.1%).
ISTAT’s preliminary estimates show that Italy’s economy will grow by 0.2% in the three months to June 2024, slowing from the 0.3% expansion in the first quarter and in line with market expectations of 0.2% growth.
Business confidence remains strong in July, employment expectations decline
Meanwhile, the European Commission announced the results of its July business and consumer survey.
The Economic Sentiment Index (ESI) remained broadly stable in both the EU (up 0.1 point to 96.4) and the euro area (down 0.1 point to 95.8).
However, the Employment Expectations Index (EEI) fell significantly (EU: -1.6 points to 98.7; Eurozone: -1.8 points to 97.8), with both regions below their long-term averages for the first time since April 2021.
Industry confidence remained largely unchanged (-0.1), with improvements in managers’ production expectations offset by declines in current order book level ratings.
The Eurozone Service Sentiment Index for July 2024 fell to 4.8, lower than market expectations of 5.5 and down from the previous month’s revised value of 6.2. The Eurozone Consumer Confidence Index for July 2024 rose slightly to -13, the highest level since February 2022, and in line with preliminary figures.
Business confidence in the retail industry fell significantly (-1.1). This is primarily because retailers’ evaluations of past and future business conditions have fallen sharply, while their evaluations of inventory levels have remained largely unchanged. Construction confidence improved slightly (+0.4).
market reaction
Immediately after the release of the statistics, the euro remained stable against the US dollar at 1.0830.
Yields on European government bonds are also stable, with German Bundestag yields trading at 2.37%. The Schatz yield on short-term maturities fell 5 basis points to 2.60%, highlighting rising expectations for a more accommodative stance from the European Central Bank following Germany’s disappointing second-quarter economic performance. It may be showing.
European stock markets attempted a modest recovery in Tuesday morning trading. The Euro STOXX 50 index rose 0.5%.
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France’s CAC40 and Germany’s DAX both rose 0.4%, while Italy and Spain’s main stock indexes rose 0.3%.
Top performers among the Euro STOXX 50 stocks included ASML Holding (up 2.5%) and Deutsche Bank (up 1.6%). On the other hand, Philips, Iberdrola, and Enel lagged behind with sales decreasing by 2.8%, 0.9%, and 0.8%, respectively.
