Economic activity in the eurozone should accelerate modestly in the first quarter of this
year after slipping in February, investment bank J.P. Morgan said
The bank's EMU activity indicator showed a monthly increase
of a below-trend 0.1 percent, while the rolling quarter
indicator suggested that GDP growth slipped to an annualized 0.5
percent rate in the three months ended February, the lowest
reading in almost three years.
While the weakness in February "was partly a reflection of
bad weather depressing industrial activity, particularly in
Germany," there were signs that economic growth would
accelerate modestly in the first quarter of 1999, JP Morgan
"When the first two months of the year are viewed
together ... weather effects boosted January production,
improvement from a very weak fourth quarter can be seen," the
"At present, the activity indicator points to a modest
acceleration in GDP growth in the first quarter of 1999 to
between 1.5 percent and two percent," it said.
The indicator uses data on industrial production,
construction sector confidence, retail and car sales,
unemployment and monetary statistics.
The data are released monthly in Germany, France, Italy,
Spain and the Netherlands, which account for almost 90 percent
of eurozone activity.
J.P. Morgan said the potential for revisions for the first two
months of 1999 was particularly large due to technical changes
being made to the industrial production series for Germany and
As a result, these key inputs to the index were based solely
on survey evidence for both January and February.
Only when actual data were available, possibly some time in
April, would it be possible to assess first quarter performance
accurately, the bank said.