The EU recorded a positive quarterly growth rate in real GDP for the ninth consecutive quarter, at the same rate as in 1Q15 and 4Q14 (+0.4%), translating into a year-on-year rate of +1.5% (+1.4% in 4Q14). Growth continued to be primarily driven by exports (with a 0.5% contribution to GDP growth), but at a lower speed due to the slowdown in external demand from emerging economies. Final household consumption remained subdued (+0.1%), despite the improved macroeconomic environment, while gross fixed capital formation (i.e. investment) accelerated (+0.5%), particularly investment in equipment.
Industrial production abruptly stagnated in 2Q15 after nine consecutive quarterly increases (+1% in 1Q15). In year-on-year terms, the upward trend continued and reached +1.6%, the highest since 1Q14. In historical terms, industrial production is near the levels reached in 1Q11 (i.e. the highest since the onset of crisis of 2008). The cumulative loss since the all-time peak reached in 1Q08 amounted to –8.4%.
The cement-manufacturing index showed signs of recovery after two consecutive quarterly falls but only rose by a meagre +0.2%. This translated into another fall year-on-year, i.e. by -0.5% – albeit much lower than the drop of- 6.2% recorded in 1Q15 – remaining rather low in historical terms as the index has fallen by -50.7% since its all-time peak in 1Q07.
In 2Q15 gross fixed investment in construction dropped by -1.4% on a quarterly basis after positive developments in the three previous quarters (+0.7%), but equated to a +1.1% year-on-year increase. Construction investment in the EU was -20% lower in 2Q15 compared to the peak of 1Q08. More specifically, the recovery of residential subsector came to an abrupt standstill as residential investment decreased by 0.8% in 1Q15. Equally, the “other construction” (including civil engineering) subsector recorded an even more severe quarterly fall (of -2%) These gloomy developments in construction investment were somehow expected further to positive developments over the three previous quarters, in line of what has been recorded for another leading construction indicator, i.e. the construction production index.
The construction production index fell by -0.3% in 2Q15, after small movements over the previous three quarters, remaining around the same level of 1Q14, which is rather low in historical terms. Production in the residential subsector was also subdued, having shown tight correlation with the total construction index since the onset of the crisis in 2008. On the other hand, over the same period civil engineering has continued to outperform the two other construction sub segments and, despite a quarterly fall in 2Q15 of -0.9%, has been in an upward trend since 1Q13.
Data for another leading construction indicator, building permits (available up to 1Q15) revealed a substantial quarterly improvement (+9.2%) which represented the highest value since 4Q11, after showing fluctuations over the last four quarters.
The housing market conditions reflected in residential property prices in the EU continued to be rather weak, as 1Q15 data revealed moderate house price growth i.e. +0.2% quarter-on-quarter after the drop of -0.5% recorded in 4Q14 (2Q15 data is not yet available at the time of writing), resulting in a correction of -5.4% from the all-time peak recorded in 2Q08.
Written by Cembureau
Read the article online at: https://www.worldcement.com/europe-cis/15102015/cembureau-quarterly-economic-report-part-two-eu28-779/