Euro area growth picks up more than expected in first quarter

Economic activity in the Eurozone accelerated unexpectedly at the start of 2017.

Gross domestic product in the single currency bloc expanded by 0.6% quarter-on-quarter during the first three months of the year, according to Eurostat, up from a 0.4% pace over the prior three-month stretch.

That was better than the rate of expansion of 0.5% which economists had been expecting.

In comparison to a year ago, GDP grew by 1.9% following growth of 1.8% in the last three months of 2016.

GDP accelerated in Germany, Spain and Italy, but not in France.

German growth saw the largest pick-up from one quarter to the next, with GDP in the euro area's largest economy rising 0.6% quarter-on-quarter in the first quarter after growth of 0.4% in the prior quarter.

"Today's upward revision in Q1 GDP mechanically pushed our 2017 forecast to 1.9% (+0.1pp), while our 2018 forecast remains unchanged at a strong 1.7% (1.73%). Risks are skewed to the upside in both years," said Barclays Research's Apolline Menut.

Pointing to recent business survey readings, Menut said upside risks were mainly concentrated on investment.