EU data mixed in May, while trade fiction concerns were under consideration

Sentiment had been slowly recovering along with EU activity date since the beginning of the year. The preliminary estimate for Eurozone GDP growth shows the economy bounced back in the first quarter, as growth rose from 0.2% to a solid 0.4% qoq. However data in May was somewhat mix. The manufacturing PMI fell to 47.7, indicating contraction, while Eurozone consumer confidence picked up in May to its highest level this year. Domestic demand remained relatively solid, but the escalation in the US-China trade war witch will weigh on external demand was a big concern. The concern in Europe, much like the US, is that trade uncertainty filters through to the labor market and starts to hurt the service sector, which had so far proved more resilient. The latest employment growth numbers in Europe were solid, though. The first estimates of employment growth for Q1 showed a pickup to 1.4% qoq, annualized.