Euro Area Q2 GDP Preview: Better Than Feared

Research evidence excerpt

Euro Area Q2 GDP Preview: Better Than Feared

Goldman Sachs

the expected level of activity in Q2. Since then, data for March was revised up and

readings on activity in April and May have so far been encouraging, especially in the

manufacturing sector.

Across components, we expect a slight moderation in real consumption growth to a soft

+0.2%qoq (vs. +0.4% in Q1), supported by still-positive growth in real retail sales despite

the drop in real fuel sales. After adverse weather conditions weighed on construction

activity in Q1, we expect a +1.8%qoq rebound in construction investment (vs. -2.5% in

Q1), consistent with the sharp rise observed in construction production in recent

months. Growth in real equipment investment should also move back into positive

territory after a -1.2% contraction in Q1, reflecting better data in the capital goods

sector. Net trade should have a modestly negative contribution on growth, after

meaningfully supporting growth in Q1, reflecting firm goods data but a softer services

balance.

On the GVA side, we expect firm growth in construction and industry, reflecting strong

data on construction production and manufacturing revenue, but softer growth in the

services sector.

On net, we look for an above-consensus +0.16% growth rate (vs. +0.34% in Q1 and

consensus at +0.1%).

France

In France, weak hard data readings for March and April (together with net negative

revisions) pushed down our Q2 tracking estimate. Since mid-June, the dataflow has

turned more positive supported by real services turnover and services exports.

We expect slightly better real consumption growth in Q2 after a flat reading in Q1, with

consumption indicators on both the goods and services side tracking better than in early

2026.