The Eurozone economy accelerated in the third quarter but employment stagnated

The Eurozone economy stepped on the accelerator in the third quarter, although its growth remained soft in a context marked by political instability, but in which the agreement on tariffs between the European Union and the United States brought a little more certainty to economic agents (companies, families, governments…). Eurostat, the community statistics office, confirmed this Friday that the GDP of the group of countries that share a currency increased by 0.2% between July and September, one tenth more than the previous quarter. Employment, however, increased at the same rate as in the immediately previous period, just 0.1%.

If the comparison is made with the same period a year ago, seasonally adjusted GDP increased by 1.4% in the euro zone (it came from 1.5% in the second quarter), while employment increased by 0.5% in the euro zone, one tenth more than just a year ago. Spain continued to grow three times more than the area as a whole, despite the fact that its GDP grew somewhat less than in the previous quarter, 0.6%. Sweden, with a quarterly increase of 1.1% and Poland and Slovenia (+0.8) were the most dynamic economies in that period, while Romania and Lithuania saw their activity decline by 0.2%.

From the Swiss private bank Julius Baer they attribute the positive surprise to higher growth in Francewhere political instability appears to have had a less negative impact than feared. By contrast, the economies of Germany and Italy stagnated in the third quarter despite relative political stability. “Looking ahead, we expect eurozone economic growth to gradually accelerate, driven by the resumption of growth in Germany, where this year has seen the most significant shift in fiscal policy towards higher spending,” they note.

For now, inflation in the euro zone also gives the European Central Bank (ECB) some respite, given that in October it stood at 2.1%, practically in line with the entity’s objective in the medium term. “We continue to expect inflation to gradually fall below the ECB’s target in 2026 due to base effects and low imported inflation,” they add from Julius Baer.

“Persistent price pressures suggest no rate changes in September,” adds Irene Lauro, Eurozone economist at Schroders. The expert remembers that Eurozone core inflation remains firmly above the 2% target of the ECB, which reveals the existence of “persistent pressures” on prices, while headline inflation rose to 2.1% year-on-year, from 2% in July.