Eurozone GDP contracts in Q3 but labour market remains resilient

The Eurozone contraction was confirmed at 0.1% in the third quarter, but the number of people in employment jumped more than forecast.

Gross domestic product for the single-currency region declined by 0.1% over the three months to end-September, after rising by 0.2% in the second quarter, according to estimates released by Eurostat on Tuesday. Compared with the third quarter of 2022, GDP had expanded by 0.1%.

Both figures were in line with analysts' expectations after the preliminary estimates were released two weeks ago.

Meanwhile, Eurozone employment rose by 0.3% over the third quarter, picking up after a 0.1% increase in the second quarter. Compared with last year, employment growth rose to 1.4% from 1.3% previously and ahead of the 1.2% consensus estimate.

Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said the overall slowdown in economic activity has clearly had "little negative effect on the labour market".

"The increase in employment in Q3 paints the same picture as the monthly unemployment data, that is, one of resilience. That’s great news for the economy, but it’s a challenge for the European Central Bank, which continues to voice worries about the potential boost to wage growth from a tight labour market."