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Euro area GDP expands at 0.6% pace in Q2

01 August 2017

Economic growth in the euro area accelerated slightly to 0.6% quarter-on-quarter in the three months ending June, in line with analysts' expectations.

On a year-on-year basis, the seasonally adjusted GDP rose by 2.1 percent in the eurozone and by 2.2 percent in the EU28 in the second quarter, said the EU's statistical office.

The agency will release updated estimates of eurozone GDP growth on August 16 with final data to come on September 7.

Unemployment reached 9.1 per cent in June, down from 9.2 per cent in May, according to the European Commission.

The data reinforces the view that the Eurozone economy continues to gain momentum after more than two years of massive asset purchases by the European Central Bank and nearly a year and a half of negative interest rates.

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"All in all, the eurozone economy has rounded out the first half of the year in a very healthy state and seems to be set up nicely for continued firm growth for the rest of 2017". Indexes of manufacturing activity are showing strong growth. Any good data from the Eurozone is likely to make the process of tapering easy and also push the European Central Bank towards the same, much quicker than anticipated, and this is something that the market hates.

Against this background, EUR/USD eased modestly after the numbers but this year's strong upward trend still shows no sign of faltering, even though momentum indicators suggest that it now overbought.

Other figures released on Monday showed unemployment in the zone was at its lowest since 2009, building on the picture of improving economic health across the area. Economists had expected the rate to fall to 9.2 percent.

"The survey pointed to a further marked easing of price pressures in the manufacturing sector in July, which fuels hope that United Kingdom inflation is close to peaking and will go down well at the Bank of England", said Archer.

Euro area GDP expands at 0.6% pace in Q2