EU economic growth above estimates

The euro’s strength and higher oil prices are making European companies less competitive in the export market, as the euro rose 0.5 percent to $1.5607 over the last month.

In the period of the rising euro, exports still held their own with investments growing by 1.6 percent although domestic private consumption only increased marginally by 0.2 percent.

The services Purchasing Managers Index and the manufacturing Purchasing Managers Index are both indicating towards a slowdown as the 15-member euro zone economy grew by 0.8 percent from the last quarter during the first three months of 2008.

EU economic growth has been driven by the strength of Germany’s first quarter as the economy expanded, due to the increase in construction spending, as contractors benefited from mild weather.

Germany’s Ifo index of business sentiment rose in May and according to a survey by NTC Economics European retail sales rose for the first time in three months.

Yet despite this, signals of resurgence shows overall economic growth is cooling and the European Central Bank is still primarily focused on price stability rather than focusing on economic growth. Worryingly the EU statistics office has revealed that euro zone inflation in May is at a 16-year high of 3.6 percent.

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