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 Gross domestic product in the 19 countries sharing the euro rose 0.4
percent quarter-on-quarter for a 1.0 percent year-on-year rise -
just below forecasts in a Reuters poll of economists.
European Union statistics office Eurostat gave no detailed breakdown
with Wednesday's data, while economists said growth was likely to
have been helped by lower food and energy prices, a weak euro and
the asset-buying program the European Central Bank started in early
March.
"It is evident that improved growth was due to strengthened domestic
demand. Domestic demand was certainly behind the improved growth in
France and Italy, and it also reportedly held up reasonably well in
Germany," said Howard Archer, economist at IHS Global Insight.
GERMANY DISAPPOINTS, FRANCE OUTPERFORMS
Overall, however, growth in Europe's largest, and traditionally
export-led, economy Germany slowed more than expected as imports
rose more sharply than sales abroad.
That net drag from trade activity was replicated across the bloc as
muted global growth curbed export growth despite a weaker euro,
Archer said.
Germany's GDP grew 0.3 percent on the quarter, down from 0.7 percent
in the previous three months and undershooting a consensus forecast
of 0.5 percent in a Reuters poll.
"Weak global trade is hitting German industry ... and if the
consumers start refraining from spending too, overall economic
growth will decline rapidly," said Thomas Gitzel, chief economist at
VP Bank.
The growth rate was half that of neighboring France, the bloc's No.2
economy, which expanded by 0.6 percent, its strongest rate in two
years, boosted by a 0.8 percent rise in consumer spending.
Finance Minister Michel Sapin said the French economy would now grow
faster than the 1 percent the government had forecast for 2015.
Archer said it was likely that consumer spending was a significant
growth driver across the region and that investment strengthened in
a number of countries, helped by improved business confidence.
Higher inventories were also likely to have contributed to growth.
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STEADY ACCELERATION
Quarterly growth in the euro zone was the strongest since the second
quarter of 2013 and marked a steady acceleration over the growth
rates of 2014.
Marco Valli, chief euro zone economist at UniCredit, said the same
pace of growth should be maintained in the current quarter as waning
support from oil prices should be compensated by a stronger impact
from the weak euro.
"We think the euro zone has reached cruising speed of 1.5-2.0
percent annualized (growth), with favorable developments in oil
prices and the exchange rate more than offsetting ongoing weakness
in global trade," he said.
Economists said the faster euro zone growth and an end to a run of
negative inflation numbers in April were unlikely to stop the ECB's
money printing program.
The central bank, which aims to lift euro zone inflation
expectations back to its target rate of just below 2 percent, has
repeatedly said it has no plans to end the quantitative easing
scheme before its scheduled conclusion in September 2016.
The euro zone's third biggest economy Italy grew 0.3 percent quarter
on quarter, slightly more than expected thanks to a pick-up in
domestic demand, fuelling hopes of a recovery this year after three
years of recession.
(Additional reporting by Philip Blenkinsop and Gavin Jones in Rome,
editing by Jeremy Gaunt and John Stonestreet)
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