Rapid growth in household incomes powering Eurozone recovery

Jake Cordell
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European households had a bit more cash at the end of the month
European households had a bit more cash at the end of the month (Source: Getty)

Household incomes grew by one of their fastest rates since the financial crisis in the Eurozone earlier this year, as the recovery in the single currency area picked up steam.

Disposable income per person, which takes into account all kinds of incomes and expenditures, climbed by 0.9 per cent in the first quarter, up from a rate of just 0.3 per cent in the final few months of 2015.

The bumper growth was the joint-quickest since the slowdown, with incomes also growing by 0.9 per cent in the first quarter of 2015. It also marks an impressive turnaround from the run of nine consecutive quarters where incomes dropped between 2010 and 2012.

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Higher levels of take-home pay boosted consumer spending, with consumption growing at its fastest quarterly pace - 0.8 per cent - in more than a decade.

The shopping spree underpinned the Eurozone's strong 0.6 per cent rate of expansion in the first three months of the year, as the bloc beat both the UK and the US. GDP numbers out tomorrow are expected to show that rate slipped back in the second quarter, although the leading economic sentiment index (ESI) out this morning provided signs of optimism as firms and customers reported few signs that the UK's vote to leave the EU was weighing on confidence.

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