The latest Eurostat GDP estimate showed that the eurozone economy expanded as initially estimated in the first quarter of this year, confirming a previous estimate.
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 per cent sequentially in the first quarter, slower than the 0.7 per cent expansion seen in the previous quarter. This growth rate was, however, in line with the estimate released on May 15.
On a yearly basis, GDP growth slowed to 2.5 per cent, as estimated, from the 2.8 per cent 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.
In the meantime, 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 (PMI) rose to 54.0 in May from 52.8 in April, compared to forecasts for a reading of 52.9. This reading signalled 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 labour market conditions placed upward pressure on wages and difficulties to recruit skilled personnel.
Finally in the US, business activity throughout the services sector rose sharply in May, according to the latest survey data. The seasonally adjusted final IHS Markit US Services Business Activity Index rose to 56.8 from April’s 54.6. The survey data hinted at the most rapid growth since April 2015. The surge in business activity was mainly linked to more favourable economic conditions and higher customer demand.
This report was compiled by Bank of Valletta for general information purposes only.