(MENAFN– ecpulse) Euro area growth eased in the first quarter at 0.2 percent, the preliminary reading showed, driven by the slowdown in gross fixed capital formation.
The quarterly reading posted 0.2 percent increase from a revised of 0.3 percent. On the yearly basis, the reading remained unrevised at 0.9 percent.
Gross fixed capital formation recorded 0.3 percent rise from a revised of 0.9 percent.
Government expenditure soared 0.3 percent from a revised of -0.4 percent, while household consumption advanced 0.1 percent from a revised of 0.0 percent.
The main contribution to growth came from the region’s biggest economy as the growth pace in Germany accelerated to 0.8 percent in the first quarter from 0.4 percent in the previous three months.
In France, the expansion pace remained unchanged at 0.8 percent, while Italy reported an unexpected contraction of 0.1 percent.
Data released today showed that euro area composite of manufacturing and services dropped last month 53.5 from 54.0 in April, lower than analysts’ forecasts of 53.9.
The European Commission has slashed its growth forecasts for the euro area to 1.7 percent next year from earlier estimates of 1.8 percent.
Now, there is more pressure on policymakers to take a monetary action tomorrow, where the low inflation encountering the euro area meanwhile is the main threat to the recovery trajectory.
CPI estimate for the year ended May retreated further to 0.5 percent from 0.7 percent.
The ECB decided to hold its monetary stance last month but economists predict further addition to stimulus when policymakers announce their monetary decision on Thursday to avoid a prolonged period of low inflation.
Eyes will also focus on the new growth and inflation forecasts due to be released tomorrow by the ECB.
As of 09:12 GMT, the EURUSD traded lower around 1.3606 after touching a low of 1.3599 and a high of 1.3628.
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