Q2 growth set to be healthy, but slower than last year

Hard data relating to euro-zone activity in Q2 have been a little disappointing so far, denting hopes that GDP growth would rebound strongly after Q1’s 0.4% quarterly expansion. Industrial production declined by 0.9% m/m in April, while retail sales fell by 0.1% m/m in April and flat-lined in May. But the surveys paint a more positive picture – the Composite PMI appears consistent with a slight acceleration in growth to about 0.5% q/q. This would be weaker than the 0.7% average seen last year, but still a strong pace by the euro-zone’s standards, implying that price pressures should gradually build.