Euro Zone 2nd Quarter GDP Annual Rate of Growth May Exceed the 2.46% of the U. S.

Incoming data on economic conditions in the Euro Zone suggests that the second quarter growth is likely to exceed the 2.53% annual rate of GDP growth in the first quarter. If so, it will be the first time since 2001 when the annual rate of growth in the Euro Zone exceeded that of the United States. The seasonally adjusted annual rates of GDP growth for the Euro Zone and the U. S are shown in the first chart.

The unemployment rate for the Euro Zone fell to 7.8% in June, the lowest value since August, 2001. The average for the second quarter was 7.9% compared with 8.1 % in the first quarter. Most of the other current economic indicators, such as production, new orders, shipments and sales, have been positive, but are available only through May. However, the Center for Economic Policy Research (CEPR) based in London produces an indicator, EuroCOIN^TM, of the monthly growth in real GDP that is used in their analysis of the business cycle. This indicator tracks the quarterly changes in real GDP reasonably well as can be seen in the second chart.According to CEPR, if the value of the indicator is above the long term average of the monthly growth rate--0.59% (the monthly average growth of the sample period, 1988-2003)--this suggests that the economy is growing at a rate faster than the long term norm. In June, the indicator was .633 and for the second quarter it averaged .620 suggesting that second quarter growth is above average.