Euro area expanded at a slower pace in the first quarter, largely due to temporary factors like weather, official data showed Wednesday.
A private survey revealed that the manufacturing sector in the currency bloc grew at the slowest pace in more than a year in April.
Gross domestic product grew 0.4 percent sequentially in the first quarter, slower than the 0.7 percent expansion seen in the fourth quarter, according to preliminary flash estimate from Eurostat.
The rate came in line with expectations and was the slowest since the third quarter of 2016.
On a yearly basis, economic growth eased to 2.5 percent, as expected, from 2.8 percent in the fourth quarter.
Among big-four nations, France and Italy expanded only 0.3 percent each in the first quarter. Meanwhile, Spain maintained a stable growth of 0.7 percent. Germany’s first quarter GDP data is due on May 15.
Even though early survey data for the second quarter has stabilized, there is not much that indicates a bounce back, Bert Colijn, an ING economist said. The economist expects GDP growth to remain healthy in 2018, but unlikely to reach the highs of last year.
The final factory Purchasing Managers’ Index for manufacturing fell to a 13-month low of 56.2 from 56.6 in March. The flash reading was 56.0.
The upturn in the sector has lost noticeable momentum since the PMI hit a record high in December 2017, IHS Markit survey revealed.
While the current pace of growth remains solid, the trend in the surveys in coming months will provide important clues as to the degree to which underlying demand may be waning and the extent to which policymakers should be concerned about the health of the economy, Chris Williamson, chief business economist at IHS Markit, said.
Among big-four nations, Germany was the top performer. The pace of expansion improved in France, while growth in Spain and Italy weakened in April.
Nonetheless, Germany’s headline IHS Markit/BME manufacturing PMI slid to 58.1 in April from 58.2 in March. This was the lowest reading for nine months and matched the flash estimate.
April saw a stabilization in the rate expansion in the French manufacturing sector. The final PMI rose marginally to 53.8 from March’s 12-month low of 53.7. The flash score was 53.4.
The indicator signaled a nineteenth consecutive improvement in the overall health of the French manufacturing sector.
Elsewhere, official data showed that the euro area unemployment rate remained unchanged at the lowest level since December 2008, despite the slowdown in economic activity.
The jobless rate held steady at 8.5 percent in March. The rate stood at 9.4 percent in March 2017.
The unemployment rate among youth, aged under 25, slid to 17.3 percent in March from 17.5 percent in February.