Nominal wages increased by 2.5 percent in Q1 while inflation remains low so far, well below 2 percent in most countries, strengthening the purchasing power of households. The unemployment rate fell to 7.5 percent in May, the lowest rate recorded in the Euro Area since July 2008. The main cloud on the horizon concerns Germany. Confidence in the economic engine of the Euro Area is deteriorating rapidly. Industrial production growth has been in negative territory since November 2018. Yet, the government seems reluctant to use fiscal policy to sustain the economy, putting growth in the entire Euro Area at risk.