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Eurozone economic growth slows in Q1 on weaker net trade

Eurozone economic growth moderated to 2.5% in the first quarter of the year, in line with previous estimates, from 2.8% in the last quarter of 2017, the latest Eurostat data showed.

On a quarterly basis, seasonally adjusted GDP growth slowed to 0.4% in the first quarter, also in line with estimates, from 0.7% in the preceding three-month period.

Exports fell 0.4% after rising 2.2% previously, while imports were down 0.1% following a 1.5% increase. Weaker net trade drove the overall deceleration in first-quarter GDP growth, said Stephen Brown, European economist at Capital Economics.

Net trade detracted 0.1 percentage point in first-quarter GDP growth after contributing 0.4 percentage points in the previous period.

Brown noted that one-off factors such as cold weather and a flu outbreak weighed on the economy in the first quarter, but added that growth is unlikely to pick up in the second quarter. "The latest evidence has reduced hopes of a rebound in Q2. While the [European Commission]'s economic sentiment indicator has held up fairly well, the composite PMI fell to an 18-month low in May."

"At this stage, quarterly growth seems likely to be around 0.4% or 0.5% in Q2."

Household final consumption spending rose 0.5% in the first quarter, compared with a 0.2% increase in the prior period. Gross fixed capital formation edged up 0.5%, slower than the 1.3% growth seen previously.

The latest data comes ahead of a European Central Bank meeting June 14, where policymakers are expected to discuss whether to end the central bank's bond-buying program.

The euro was up 0.40% to $1.1821 as of 6:13 am ET.