The better performance of the European economy in the third quarter is explained primarily by Germany (+0.2%), which regained positive growth after the decline in economic activity in the second quarter (-0.3%). France was also pleasantly surprised, with the help of the Olympic Games in Paris, with a 0.4% increase in GDP compared to 0.2% in the second quarter. Spain confirmed its dynamism with a further surge in economic activity of 0.8%.
The renewed growth in the third quarter does not change the weak outlook for the euro area. The rising energy prices and trade tensions have plunged European industry into a deep crisis. This already directly penalises economic activity. However, it will also cause unemployment to rise to a record low of 6.3% in September, weighing on morale and household consumption. This will be particularly the case in Germany, the industrial giant of the eurozone. However, apart from the case of Spain, which is taking advantage of the boom in tourism to maintain strong growth, most European countries will experience weak economic dynamism in the coming quarters.
European inflation rebound
In October, inflation in the euro area rose to 2% from 1.7% in September. This increase was partly expected and is explained by the lower fall in energy prices (-4.6% in October compared to -6.1% in September). Excluding energy and food, inflation remained stable at 2.7%.
For the second consecutive month, inflation is in line with the official European Central Bank target of an annual price increase of 2%.
Last month's rise in inflation will not prevent the ECB from continuing monetary easing. However, providing water to the mills of the great European silver miners who advocated caution could slow the interest rate decline.