Q1 15 euro area GDP breakdown to show a consumption led recovery

The third estimate of euro area GDP should confirm the first and second estimate of 0.4% QoQ and 1.0% YoY. Looking at the breakdown, Societe Generale says, the euro area is going through a consumption led recovery. This is supported by the improvement in the PMIs observed over the first quarter of this year, which stemmed mostly from the services sector. 

"Consumption is expected to increase at a 0.4% QoQ. Consumption has been supported by easing credit conditions, a lower euro and oil prices and of course, QE. However, looking forward to Q2, analysts think the improvement in domestic demand will start easing due to the recent rebound in the oil price- this will hamper this engine of growth. Turning to investment, an increase of 0.5% QoQ is expected. As with consumption, investment continues to be supported by the positives already mentioned, businesses still need to be convinced that these factors can materialise into sustainable and structural growth", according to Societe Generale. 

Meanwhile government expenditure should increase by 0.4% QoQ as, mainly driven by the reduction in the pace of austerity. Final net exports is likely to have a negative contribution to growth in Q1 as global demand remained lacklustre, with particular weakness in China and the UK, expects Societe Generale.