This is the first reading for April to June GDP, the 'advance'
- Consensus expectations are for 0.6% q/q (sa) and 2.1% y/y
- Previously (i.e. for Q1) GDP was 0.6% q/q and 1.9% y/y
From client notes, here is what HSBC are expecting:
Throughout Q2, survey data have pointed to an upswing in eurozone growth.
- The composite PMI survey remained relatively steady and high compared to hard data, although it did decline slightly by 0.5pts in June to 56.3.
- Consumer confidence has improved markedly, and is nearing pre-crisis levels, increasing from -3.6 to -1.3 between April and June in net balance terms.
- With regards to hard data, industrial production rose by a strong 1.3% m-o-m in May after increasing by just 0.4% in March and 0.3% in April, hinting that the gap between soft and hard data, which were lagging behind, might be starting to close.
The slight fall in inflation compared to the 1.9% y-o-y peak reached in April could have given some breathing space to consumption, a key driver of eurozone growth so far.
We see eurozone growth at 0.5% q-o-q in Q2, corresponding to an annual growth rate of 2.0%. However, given the strength of the recent industrial production data, which account for about 20% of GVA, there could be some upside risks to our growth forecast.
And, this from the preview from Société Générale:
We expect euro area GDP growth to have stabilised at 0.6% qoq in 2Q17, or around 2.4% in annualised terms.
- Consumption looks set to have remained the largest contributor to euro area GDP growth, adding 0.3pp.
- Low debt servicing, tax cuts and a lower savings rate likely continued to boost consumer expenditure over the quarter.
- Our models point to euro area consumption growth of 0.5% qoq in 2Q17 up from 0.35% in 1Q17.
- We expect investment to show a similar healthy trend to that of 1Q17, contributing 0.3pp to GDP growth.
- Net exports and inventories are likely to be neutral.
Looking ahead, we forecast firm growth of 2.1% in 2017 and 1.7% in 2018.
In the details, we expect Germany and Spain to be the main drivers of the strong GDP growth (respectively: SGe for 2Q17 of 0.7% qoq GDP growth and 0.9% qoq).
France and Italy will likely follow, with GDP growth rates of 0.5% and 0.4% qoq respectively
Preview via Bank of America / Merrill Lynch:
Available monthly data for the quarter (our tracker) suggest more or less continued growth momentum in line with Q1. Indeed, we track a high 0.5% qoq print for GDP growth in the Euro area, still below that indicated by PMIs, but the gap has almost closed.
- Our GDP forecast is also a bit more cautious and we foresee Q2 growth at a low 0.5% qoq.
- The reason we keep our forecast slightly below the tracker is because in two countries 1Q growth was boosted by strong contributions from inventories - something that trackers usually do not easily take into account - with thus a risk of mean reversal in 2Q.
