The report stated on Thursday 29 June:

“While these figures constitute a negative signal for early 2017, they are founded on a statistical basis that is still too patchy to establish a reliable diagnosis. Economic surveys among companies and households in Luxembourg and the eurozone remained on a favourable trend over the spring.”

Added value in volume of financial activities were down sharply, by -7.3% over one quarter.

Statec notes that

“it is difficult to ascertain if this phenomenon is part of a trend reversal or if it is a temporary downturn (financial sector data can be subject to quite significant adjustments in the short term).”

Non-financial services do better

On the other hand, non-financial services could register an increase of 2.2% over the quarter, with the best results in information and communication, business services and trade.

Investment expenditure continued to rise (+2.3% over one quarter, and 11% over one year), due mainly to acquisitions of aircraft and satellites. However the impact of that investment growth is limited in terms of GDP as imports rise at more or less the same extent.

GDP in the Eurozone

GDP growth in the Eurozone in the first quarter of 2017 was also revised upward to 0.6% over one quarter (against 0.5% in the quick estimate). This revision was mostly due to better than expected results in France, Italy, Austria and Greece.

Inflation in food prices

The report states that food prices have seen an increase of 2.8% over one year in May and substantially exceeds general inflation (+1.7%):

“While inflation in fresh vegetables has stabilised in recent months after the soaring prices last winter, meat prices (particularly beef) remain high (+3.4% over one year in May compared to 1.4% over 2016 as a whole). Meat prices are currently contributing 0.1 percentage points to inflation. Prices of dairy products (especially butter) have recently picked up in Luxembourg and across Europe in general. The sharp rise in milk prices since the second half of 2016 (+50% over one year in May) has thus started to affect consumers. The price of sugar and some fats and oils posted an annual increase of over 10% in May.”