The euro-area economy growth posted much better-than-expected 1% in the second quarter as Germany and France unexpectedly returned to growth. This figure was the fastest in four years.
Analysts had forecast the average growth rate in this area was below 1% from the preceding quarter.
Germany’s GDP expanded 2.2 percent over the first three months of the year, which blew past market expectations and reaffirmed the nation remains the growth engine of Europe. Before, 34 economists polled by a Reuters poll had expected 1.3 percent growth. German consumer spending supported the bounce in growth because 0.2% of people found jobs.
German calendar-adjusted GDP grew by 3.7%, in comparison with the same period a year earlier.
This economy lost momentum at the turn of 2009-2010.
According to Economy Minister Rainer Bruederle, the country’s economic recovery had shown itself to be much stronger than people had recently forecast.
2.2% growth is “impressive but not surprising”. In the second quarter, its economy gained benefits from two factors: strong foreign demand for German goods and a catching up in the construction sector. 2010 German growth was expected to reach 3.25%, higher than the previous projection of 2.5%.
The chief economist at Commerzbank, Jörg Krämer, was cautious that Germany’s GDP expansion was the result of construction projects.
France grew by 0.6 percent on the second quarter.
France’s household consumption jumped to 0.4 percent. Its investment expanded 0.8 percent during the second quarter. However, growth was curbed by weak foreign trade. While imports jumped 4.2 percent, exports posted only 2.7 percent gain.
According to Oscar Bernal, an analyst at ING, economic activity in France was not able to gain much benefit from the rebounce of international trade.
Netherlands and Italy were a drag on the euro-area economy. The former declined 0.9 percent and the latter contracted 0.5 percent in the second quarter.
Stocks and the euro climbed, following the figures announced. The figures attributed to the signs that the worst of the global slowdown has gone.
The euro advanced up 0.8 percent to $1.4295 at 3:12 p.m. in London. The Dow Jones Stoxx 600 Index of European shares added to 229.97.
There was an improvement in demand for European exports. In addition, the European Central Bank will not need to take any additional moves. However, rising unemployment across the Europe possibly restraints consumer spending.
Euro-area economy contracted 0.1% as Germany and France returned to growth