Seasonally-adjusted GDP was up 0.3% in the bloc compared to the previous quarter and 1.6% from the second quarter of past year.
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The Eurostat figures showed that private consumption rose 0.2 per cent, contributing 0.1 percentage point to growth while government spending increased 0.1 per cent. Exports surged 1.1 per cent, the most since the second quarter of 2015, while imports gained 0.4 per cent. Romania (1.5 percent) and Hungary (1.0 percent) recorded highest growth while France, Italy and Finland stagnated.
The annual rate is also unchanged, at 1.6 percent y/y, and we continue to expect a shift down in gear in average quarterly GDP growth in the second half of 2016 from an average 0.4 percent per quarter in the first half, to an average 0.25 percent to 0.3 percent per quarter in the second half.
Dennis de Jong, managing director at UFX.com, said: “Following a stronger-than-expected first quarter, European Central Bank president Mario Draghi will be pleased to see the eurozone continued to grow during Q2 – albeit at a slower pace than the start of the year”.
The latest composite purchasing managers’ index (PMI) in the single currency bloc came in at 52.9 in August, down from 53.2 in July and recording a 19-month low, largely due to weaker economic growth in the bloc’s powerhouse Germany, whose PMI rose at the slowest pace for 15 months. Moreover, it is widely expected that the president Mario Draghi is unlikely to announce any rate cut and major stimulus measures.
The slowdown in overall growth suggests that businesses and consumers may have become more cautious due to significant global uncertainties, including June’s United Kingdom referendum on European Union membership, even though confidence was seemingly pretty resilient in the second quarter, IHS Global Insight economist Howard Archer said.
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The Capital Economics predicted that the Bank would announce a six-month extension to its asset purchase program.
