The U.S. economy, the world’s largest, grew at a 1.7% annualized rate from April through June after a 1.1% pace in the first quarter.
“Euro-area export growth should benefit from a gradual recovery in global demand, while domestic demand should be supported by the accommodative monetary-policy stance as well as recent gains in real income owing to generally lower inflation,” Draghi said on Aug. 1. The ECB cut its benchmark interest rate to a record low of 0.5% in May and committed in July to keep it at the present level or lower for “an extended period” to foster growth.
Global companies’ second-quarter earnings suggest the worst may be over for Europe. The continent’s second-biggest automaker, PSA Peugeot Citroen, reported a smaller operating loss for the second quarter than analysts had projected and French car sales rose in July for the first time in almost two years. Henkel AG, the German maker of Loctite glue, reported second-quarter earnings that beat estimates.
Sovereign borrowing costs have dropped across the bloc this year. Italy’s and Spain’s 10-year yield premium over benchmark German bunds shrank to the smallest in two years yesterday. The spread narrowed to 237 basis points for Italy, the least since July 22, 2011, and compared with a euro-era record of 575 basis points in November 2011. For Spain, it shrank to 265 basis points, the tightest since Aug. 16, 2011, down from 650 basis points in July 2012, when Draghi pledged to do whatever was necessary to hold the single currency together.
The yield on Spain’s 10-year debt was at 4.42% at 3:51 p.m. in Brussels. The yields for similar maturities were at 1.82% for Germany, 2.34% for France and 4.17% for Italy.
From a year earlier, the euro-area economy shrank 0.7% in the second quarter, according to today’s report, which is a first estimate for the April-June period. The statistics office is scheduled to publish a breakdown of second- quarter GDP next month.