(Bloomberg) — The euro-area economy expanded by more than initially estimated in the second quarter, with the revision revealing greater support from consumer and government spending.
Output rose 0.8% from the previous three months — stronger than an earlier reading of 0.6% — as gains in consumption expenditure more than offset a drag from trade. Employment gained 0.4% during the period, separate Eurostat data showed Wednesday.
While the figures signal that the euro-area economy found itself on firmer-than-expected footing as it headed into the summer months, the region is facing soaring energy costs and potential supply shortages because of Russia’s war in Ukraine. Analysts fear the bloc is on the verge of a recession, with business surveys showing factories are already slowing down as consumers’ purchasing power deteriorates.
European Central Bank officials, meanwhile, are gearing up for another interest-rate increase this week, with economists surveyed by Bloomberg predicting a 75 basis-point hike. While some policy makers say its important to take forceful action now to prevent inflation from becoming entrenched, others warn aggressive hikes risk exacerbating the region’s economic pains.