The Euro Area’s Economy Has Been Re-Energized
Euro area’s real GDP increased by 0.6% in the fourth quarter of last year following a 0.7% advance in the previous period. Eura Area GDP was 2.7% higher in Q4, 2017 than in the same quarter of 2016.
Over the whole year 2017, real GDP rose 2.3% in the Euro Area, compared with 1.8% growth in the previous year.
Euro GDP growth in the fourth quarter was driven by exports and fixed investment while consumer spending increased at a slower rate. Among the zone's largest economies, growth eased slightly in Germany and Italy, was unchanged in Spain and picked up in France.
The Euro Area’s Job Market Strengthened
The unemployment rate in the Euro Area edged down to 8.5% in February of 2018 from 8.6% in the previous month, its lowest jobless rate since December of 2008. The unemployment rate fell nearly a full percentage point from 9.5% a year earlier.
The simplest explanation for the improving employment picture in the Euro Area is that economic growth sped up by nearly a full percentage point in 2017 compared to 2016. In other words, a stronger economy does create jobs.
As previously noted unemployment is now declining in both the so-called periphery countries which have financial problems as well as the larger, more stable members of the block.
In February France’s unemployment rate was 8.9%, Germany’s 3.5%. Italy’s 10.9%, and Spain’s was 16.1%.
Disclosure: None.
YIkes. This is a hard question to answer.
From my experience, strong economic growth is rarely a good predictor for the market. To use an economist cop out, strong growth is likely a necessary condition, but not on its own a sufficient condition for strong equity markets.
That's a fair answer.
The political and economic risks are real.
Brexit and the impact on euro mkt, Trump and his antics, worries about foreign trade barriers, the swing to the right in some countries, and concerns over when the ECB starts to withdraw monetary support. My own sense is that the euro will hold together.
All very overstated in my view and dwarfed by the momentous free market economic reforms happening in many countries there, including Spain, France and Italy. Not to mention that the ECB's stimulus has really worked well. I think the stocks will turn around soon.
Interesting. What do you think is holding back European stocks? Geopolitical problems? Continued worries about the euro zone breaking up?
So can we expect a big surge in European stocks anytime soon?