Economic indicators suggest that domestic demand remains resilient, as signalled by the growth of consumption, which grew 0.5% quarter-on-quarter in the first quarter of the year, and investment, which grew by 1.1% during the same period. While first quarter growth was somewhat stronger than previously anticipated, incoming data and survey information point to somewhat more moderate growth over the next few quarters.
This reflects the ongoing weakness in international trade in an environment of prolonged global uncertainties, which are weighing, in particular, on the euro area manufacturing sector. In fact, some leading indicators such as manufacturing PMI and the ECB indicator on euro area new orders have declined recently, confirming weakening dynamics in the euro area manufacturing sector.