The economy of the euro area showed growth as expected in the third quarter, with employment rates also reflecting progress, as reported by Eurostat on Thursday. The region's GDP rose by 0.4% compared to the previous quarter, an improvement from the 0.2% growth in the second quarter, according to preliminary data.
Year-on-year, the GDP increased by 0.9% in the third quarter, up from 0.6% in the second quarter, aligning with initial forecasts. Additionally, employment figures rose by 0.2% sequentially, doubling the 0.1% increase seen earlier.
On an annual scale, employment grew by 1.0% in the third quarter, compared to a 0.9% rise previously. Despite these positive numbers, economist Jack Allen-Reynolds at Capital Economics expressed skepticism regarding the sustainability of this growth. Surveys of businesses and consumers indicate that growth may decelerate in the fourth quarter, with a likelihood of remaining modest into the following year.
Allen-Reynolds pointed out that stalled productivity improvements have kept unit labor costs elevated, maintaining persistent underlying inflation. He suggested that a consistent productivity boost would support the European Central Bank's consideration for further interest rate cuts.
In related data, industrial production in the euro area experienced a downturn in September, primarily due to declines in energy and capital goods sectors. Industrial output decreased by 2.0% from August, contrasting with a 1.5% rise in that month and exceeding the forecasted 1.3% drop.
Year-over-year, the fall in industrial production intensified to 2.8% in September from a mild 0.1% dip in August, as opposed to the expected 2.0% decline.
