Eurozone economy nudges ahead in third quarter

The Eurozone economy showed marginal growth in the third quarter, underpinned by spending from both consumers and governments.

According to Eurostat, the European Union’s official statistics body, seasonally adjusted GDP rose by 0.2% across the 19 country-strong currency area, and by 0.3% across the wider 28-strong trading bloc. GDP rose by 0.2% in both zones in the second quarter.

The quarter-on-quarter rise was in line with initial estimates and with analysts' forecasts.

Year-on-year, GDP was unchanged at 1.2% in the Eurozone and at 1.2% in the EU28.

Overall, household final consumption rose by 0.5% in the Eurozone, helped by stronger demand for durable goods in Germany, the region’s largest economy. Government spending slowed marginally, but still came in at 0.4% after the second-quarter numbers were revised upwards.

Within individual Eurozone countries, Germany and Italy showed the lowest growth, at just 0.1%.

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said: “A jump in consumers’ spending growth was the primary driver of the unchanged growth rate in the third quarter, though private investment, ex-inventories and government spending also helped. Inventories and net trade were drags.

“Looking ahead, our baseline for the fourth quarter is for GDP growth at 0.2% quarter-on-quarter, consistent with a dip in the year-over-year rate, by 0.2 percentage points to 1.0%.”

The number of people in work in the Eurozone rose by 0.1% in the third quarter compared with the previous three months. It fell to 0.9% year-on-year, down from a 1.2% growth in the second quarter, which was slightly lower than initial estimates. However, Vistesen said the downward revision “isn’t a huge surprise. Employment growth is a lagging indicator, and it is now slowing in response to the slowdown in GDP growth which started at the beginning of 2018.

“We reckon that headline Eurozone employment growth will slow further to around 0.7% year-on-year next year.”