The Conference Board Economics Watch^® European View

First-quarter growth data provide encouraging signs in the Euro Area. Declining unemployment and the lower oil price have helped consumer confidence and spending in Europe. Industrial production continues to perform weakly, and an increase in new orders for manufacturing could result in improved production in the months ahead. Lending remains weak, but loans to nonfinancial corporations have finally bottomed out. The Euro Area crisis had a negative effect on profit growth in France and Italy, but profitability levels in Spain exceed pre-2008 levels. Euro Area profit growth is unlikely to pick up significantly in the years ahead, mainly due to slow productivity growth and looming labor shortages.