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Euro-Area Consumers Gave Economy a Lift at the Start of 2019

Euro-Area Consumers Gave Economy a Lift at the Start of 2019

(Bloomberg) -- Consumer spending and investment were the big drivers of the euro-area growth at the start of the year, when the economy showed surprising strength.

Euro-Area Consumers Gave Economy a Lift at the Start of 2019

Household expenditure jumped 0.5% in the first quarter, the most in a year, helping overall economic expansion accelerate to 0.4%. Investment and net trade also added to growth in the period, while there was a big drag -- 0.3 percentage points -- from inventories.

Data1Q 20194Q 2018
GDP0.4%0.2%
Household spending0.5%0.3%
Government spending0.1%0.6%
Grossed fixed capital formation1.1%1.4%
Exports0.6%1.2%
Imports0.4%1.2%

The numbers, while encouraging, are backward looking and may mean little to European Central Bank policy makers meeting in Vilnius. They’re still dealing with inflation that’s weaker than they would like and an economy under pressure from a global slowdown. While some measures of confidence have improved recently, the picture remains mixed and manufacturing looks particularly weak.

The ECB is expected to announce details of its new long-term loans to banks on Thursday. Economists forecast a generous package as central banks around the world start to shift position.

India’s central bank cut its benchmark interest rate for a third straight time this year on Thursday, days after Australia loosened policy. There’s also increasing speculation the Federal Reserve will lower its key rate later this year. Investors are betting the next ECB move will be a cut in 2020.

--With assistance from Kristian Siedenburg.

To contact the reporter on this story: Fergal O'Brien in Zurich at fobrien@bloomberg.net

To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net, Zoe Schneeweiss

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