Eurozone economies are growing faster than expected, raising hopes that a global slump has been avoided.

Preliminary flash data from statistics office Eurostat showed that the region’s GDP grew by 0.4 per cent in the first quarter of this year from the fourth quarter of 2018, when the currency bloc’s economy expanded by 0.2 per cent. On a year-on-year basis, GDP rose by 1.2 per cent in the first quarter, the same as in the previous three months.

The strong performance surprised economists, who said it was fuelled by lower unemployment, rising wages and stronger consumer demand. However, many analysts were unconvinced that the growth momentum would be sustained in the coming quarters as recent forward-looking indicators have been weak.

Meanwhile, UK manufacturing expansion slowed to a two-month low in April as a prolonged Brexit delay took its toll on UK factory growth.

The country’s manufacturing purchasing managers’ index (PMI) fell to 53.1 in April, down from March’s 13-month high of 55.1, a survey showed last week. The score was in line with economists’ expectations. A PMI reading above 50 suggests growth in the sector.

Export orders decreased at the second-fastest rate in four-and-a-half years. Uncertainty around the terms of Britain’s exit from the European Union, originally scheduled for March 29, had previously prompted factories to stock up on parts and materials at the fastest rate in the 27-year history of the PMI data series.

Finally, as widely expected, the Federal Reserve (Fed) announced last Wednesday that it has decided to leave interest rates unchanged. The central bank held its benchmark rate in a target range between 2.25 per cent and 2.50 per cent, matching expectations.

The Fed said information received since its previous meeting in March showed that economic activity rose at a solid pace. After the March meeting, it had noted that the pace of economic growth had slowed from the solid rate in the fourth quarter.

In a press conference after the meeting, Fed chairman Jerome Powell said that the central bank sees “transitory factors” contributing to the recent low inflation readings and that it would take persistently low inflation into account when setting policy, but currently expects inflation to return to the two per cent objective.

This report was compiled by Bank of Valletta for general information purposes only.