Strength of growth in Q1 unlikely to be sustained

Euro-zone GDP rose by a healthy 0.6% in Q1, easily outpacing the expansions in the US and UK and following disappointingly slow growth in the second half of 2015. But the data look strong relative to survey measures of activity, such as the Composite PMI. The latter fell slightly in April and suggests that, after the volatility around the turn of the year, growth is set to slow back towards an “underlying” rate of around 0.3% per quarter. Supporting this picture, the latest trade and retail sales data have offered some evidence that the boosts from previous declines in the euro and oil prices are now fading.