Euro zone economy outperforms Britain for second straight quarter

Randall Padilla
August 1, 2017

The stronger state of the economy reportedly backs plans by the European Central Bank to start toughening monetary policy in the fall, despite annual inflation of 1.3 percent, which is below the ECB target of just under two percent.

ISM's manufacturing PMI this afternoon is forecast to show a modest slowdown on a month previous in July.

The eurozone notched up growth of 0.6% in the second quarter of the year, official Eurostat figures showed.

But a jump in inflation, stemming from the 13 per cent slump in the value of the pound in the wake of the referendum, has dampened consumer spending this year, and pushed the UK's growth rate to the lowest of the G7 club of large and developed economies. The core index rose to 1.2% last month versus the 1.1% consensus, although this was somewhat offset by a downward revision to June's data.

Meanwhile, the euro zone economy has picked up speed, bolstered by higher business optimism, strong domestic consumption and decreasing unemployment, which in June reached its lowest level since 2009.

Meanwhile, sterling came under some pressure this morning as the Bank of England (BoE) released its latest figures for United Kingdom mortgage approvals, which revealed that the number of approved home loans tumbled from 65,109 to 64,684 in June, reaching their lowest levels since September a year ago.

The lowest unemployment rates were in the Czech Republic at 2.9% and Germany at 3.8%.

The eurozone is still working off the effects of a crisis over high government and bank debt that forced member governments to bail out member governments Greece, Ireland, Portugal and Cyprus and Spain's banks.

The agency figures showed unemployment across the bloc dropping to a nine-year low of 9.1 percent during the period.

The youth unemployment rate was 16.7% in the EU28 and 18.7% in the euro area, compared with 18.8% and 21.0% respectively in June 2016.

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