Euro zone still enjoys the best economic momentum

The macroeconomic environment maintained its trend over the past month. All the PMIs for the largest economic areas are still above 50 (see chart 1), the level that divides growth from contraction, although the G10 countries’ economic surprises index is globally negative.

The US economy suffered from the harsh winter and the rise of the US dollar in the first quarter. GDP grew at an annual rate of only 0.2%. The economic surprises index, while still negative, seems to have bottomed out (see chart 2). We expect this economic weakness to be temporary, with improved economic momentum in the US in H2 2015.

On the other hand, the Eurozone recorded a strong first quarter, with GDP expanding at the fastest pace in almost two years (1% year-on-year). The economic surprises index slowed in April but remains in positive territory. The euro zone has benefited from the depreciation of the Euro and the fall in oil prices, as well as the supportive financial conditions. Economic recovery should become firmer in the second half of the year with stronger rebounds in peripheral countries like Spain or Italy.

Globally, our macroeconomic scenario remains positive as the economic recovery seems to be still on track, especially in the euro zone.

Read the full Cross Asset Allocation Investment Strategy - Mai 2015