Heating Up: US Economic Growth Sizzles In Strong First Quarter

Switching to Europe, Ristuben said that first-quarter corporate earnings for STOXX® Europe 600 companies have been very strong. “So far, with a little less than half of all companies reporting, roughly 75% of STOXX 600 companies are beating growth expectations, marking a dramatic recovery from a year ago,” he remarked.

The strong corporate earnings are at odds with the region’s first-quarter GDP, which contracted by 0.6% on a quarter-over-quarter basis due to the reimposition of lockdowns. However, Ristuben noted that the eurozone economy gained momentum near the end of the first quarter, as evidenced by a blowout manufacturing PMI (purchasing managers’ index) reading of 62.5 in March. A number above 50 indicates expansionary conditions, and a number below 50 indicates contractionary conditions.

Much of Europe is an export-based economy, he said, meaning that when large economies such as the U.S. experience strong growth, European manufacturing generally benefits. “These strong manufacturing numbers may take a while to flow through into GDP numbers, which explains some of the discrepancy between the recent GDP report and corporate earnings,” Ristuben noted. Overall, European corporate earnings are tracking in a very similar fashion to the U.S., and are simply outstanding, he concluded.

1 2 3
View single page >> |

Disclaimer: Opinions expressed by readers don’t necessarily represent Russell’s views. Links to external web sites may contain information concerning investments other than those offered ...

How did you like this article? Let us know so we can better customize your reading experience.
Comments have been disabled on this post.