European Economy. Quarterly report on the euro area 2007.

Abstract

After five consecutive quarters of vigorous growth in the euro area, economic activity in the second quarter of 2007 slowed down to 0.3% - half of the rate projected in the Commission's spring 2007 forecast. The deceleration partly reflects temporary weather-related effects but it also signals that the euro-area business cycle may be maturing. Growth in the second quarter was primarily driven by household consumption, which continued to be buttressed by a very robust labour market. On the other hand, investment growth came to a halt for the first time in five years, mostly due to a contraction in the construction sector. The contribution of net exports to growth turned positive on the back of still robust, although moderating, world trade