The second official estimate for Q1 GDP growth was unchanged at -0.2% q/q. Incoming data for Q2, however, support the view that the output contraction was a temporary correction. Industrial production continued to correct the sharp decline at the start of the year in April, picking up +0.5% m/m. All in all, production was +2% above the average level in Q1. Important demand side indicators confirm the turnaround. Above all, the strong April increase in real exports of goods (+5.2% m/m), with imports still weak (-0.7% m/m), suggests that net exports could make a tangible positive contribution to Q2 GDP growth. Private consumption should also overcome its Q1 weakness, as the Cabinet Office’s consump¬tion index jumped an impressive +1% m/m in real terms, leaving the April index level 0.8% above the Q1 average. Finally, with a plus of +10.1% m/m, private core machinery orders are on track to meet machinery manufacturers’ expectations of a climb of +7.1% q/q in Q2 as a whole (after +3.3% in Q1), which points to a faster expansion in business investment.
