Eurozone growth rate slumps to four-year low as Italy stagnates - as it happened
Rolling coverage of the latest economic and financial news, including new growth figures from across the eurozone
- Breaking: Eurozone growth rate has fallen sharply
- Italian economic growth has fizzled out
- Introduction: Eurozone growth figures released today
- France grew by 0.4%
2.18pm GMT
Time for a recap
Growth in the eurozone has slowed to its lowest level in over four years, as the region's recovery runs out of steam. Eurozone GDP only rose by 0.2% in July-September, down from 0.4% in April-June.
"Even though these are preliminary figures and are likely to be revised once national authorities release the fuller picture of the quarter, it is now looking unlikely that the Eurozone will reach the ECB's growth projections of 2% for 2018. If current trends continue, the ECB could reconsider its future plans."
Related: Retail sales growth cools after summer spending spree
Related: IFS says Hammond's budget is gambling with public finances
Don't get too excited about yesterday's #Budget2018 income tax cuts. For most people, the impact will be very small. But for higher rate payers the jump to 50,000 is a bigger deal (even if already expected). pic.twitter.com/zhbFXetoMe
2.05pm GMT
Just in: US consumer confidence remains strong, despite the recent turmoil in the markets.
*U.S. OCT. CONSUMER CONFIDENCE INDEX RISES TO 137.9 FROM 135.3
US 'Consumer Confidence' rises in October $USD $DXY pic.twitter.com/fpS7oTyKnT
1.40pm GMT
Wall Street has opened cautiously, after a wild day yesterday which saw stocks jump, then plunge in the biggest turnaround in eight months.
While the Dow is flat, the technology-focused Nasdaq is in the red as the tech sell-off continues.
U.S. stocks open slightly lower https://t.co/dGERhpgSVo pic.twitter.com/508RzrGfw1
1.04pm GMT
Some investment advice from the White House:
The Stock Market is up massively since the Election, but is now taking a little pause - people want to see what happens with the Midterms. If you want your Stocks to go down, I strongly suggest voting Democrat. They like the Venezuela financial model, High Taxes & Open Borders!
"If the Fed backs off and starts talking a little more Dovish, I think we're going to be right back to our 2,800 to 2,900 target range that we've had for the S&P 500." Scott Wren, Wells Fargo.
12.32pm GMT
Alastair Neame, senior economist at economics consultancy CEBR, is concerned that Germany's economy has faltered over the summer.
He says:
"Eurozone growth of 0.2% in Q3 is the slowest rate of expansion since Q2 2014, which indicates that, amongst a range of risks, global trade worries may be having a bigger effect on business confidence than had been expected.
With French GDP growth having risen to 0.4%, German growth is now under the spotlight as the currency bloc begins to stagnate."
Despite Germany showing some signs of labour market strength, as unemployment fell to the lowest rate since 1990 (5.1%), the economic outlook is somewhat clouded. The latest business surveys indicate that economic sentiment in Germany has waned as a result of growing global uncertainty. The Ifo business climate index fell for the second consecutive month to 102.8 points in October.
Moreover, the decision by Angela Merkel to stand down from her position as head of the Christian Democratic party and not to stand for another term as chancellor in 2021 looks set to add to German business uncertainty.
Cebr estimates that the risk of a global recession in the next two years has risen from a fifth a year ago to a third this autumn.
As global business cycles mature, trade conflicts and emerging market crises could combine to tip the world into a downturn exacerbating the Eurozone's problems.
12.14pm GMT
Persistent Brexit uncertainty and Donald Trump's trade wars are both being blamed for derailing the eurozone recovery,
Andy Scott, associate director at independent financial risk management consultancy JCRA, says last year's strong growth has fizzled out.
"The Eurozone showed much promise during 2017. It was growing at its fastest pace in years as consumer spending was driving domestic demand. The low value of the Euro supported export growth and monetary stimulus boosted financial conditions. In the second half of 2017 the Eurozone economy grew 2.8% year-on-year; by comparison in the third quarter of this year it managed just 1.7%. The preliminary data on the current quarter points to even weaker growth.
"The data appears to show how Trump's trade measures, a lack of clarity over Brexit and Italy's budget dispute have resulted in significant loss of momentum for Eurozone economies, despite domestic conditions remaining favourable. So far, the EU has no real response to the Trump administration's "America first policy". This alongside a significant fiscal stimulus in the form of tax cuts, has materially boosted US economic growth, while global growth is slowing.
12.03pm GMT
Italy's slump into stagnation has raised fresh fears over its spending plans.
Italian government bond prices have weakened this morning, pushing up the yield (or interest rate) on the debt.
Growth was flat in #Italy in Q3, #Istat data show. This raises more questions on Italy's ability to meet its 1.5 pct of #GDP growth target next year. If growth does not pick up, the deficit risk surpassing the 2.4 pct ceiling in 2019. #euro #EU
11.30am GMT
#euroboom over... "Euro zone growth slows more than expected Q3" https://t.co/Lf4AotzWum @reutersJanS pic.twitter.com/6vSsTUOxhp
11.21am GMT
It seems likely that Europe's economy is being hurt by rising trade protectionism.
America slapped tariffs on European steel imports this summer, prompting Brussels to hit back with levies on UA goods.
Eurostat did not provide details as to why growth slowed so much. They will emerge in an updated estimate in mid-November.
But the figures are likely to fuel concerns that trade tensions around the world, notably between the U.S. and China, are having a debilitating impact on global trade. Much of the eurozone's growth is based on exports, notably from Germany.
11.03am GMT
Nicola Nobile, lead eurozone economist at Oxford Economics, says "transitory factors, particularly in Germany" is dragging eurozone growth back.
That includes a big slowdown at German car makers, who are struggling to adjust to new pollution tests introduced after the Volkswagen emissions scandal.
11.01am GMT
In another blow, economic confidence across Europe has declined.
The European Commission's economic sentiment index has dropped to 109.8 this month, down from 110.9 in September.
10.38am GMT
The Financial Times says that eurozone growth "stumbled in the third quarter", increasing at a far weaker pace than expected.
10.35am GMT
These eurozone growth figures are a 'massive disappointment', says ING economist Bert Colijn.
He writes:
Eurozone GDP growth in 3Q came in at just 0.2% and while one-off factors have influenced the number, it does not seem that growth will return to previous rates anytime soon.
In Germany, disrupted car production will have dampened GDP growth significantly in the third quarter, weighing on the eurozone average. French GDP growth was stronger than in the first half of the year, mainly led by a consumption growth recovery, although the 0.4% increase did miss analysts' expectations.
Eurozone 3Q GDP is a massive disappointment and don't expect much of a recoveryhttps://t.co/HRNEZlO7Ab
10.26am GMT
Katharina Utermihl, senior economist for Europe at Allianz SE, says this is the weakest growth in four years:
#Eurozone Q3 GDP disappoints with 0.2% q/q after 0.4% q/q in previous quarter. This is the weakest reading since 2014 with #Italy stagnating and #France failing to rebound after weak first half of 2018.
Disappointing! #Eurozone Q3 #GDP #growth falls back to 0.2% q/q as latest #PMI weakness now spells out in the data. As long as growth remains above potential it will not ring alarm bells at the #ECB, but set the scene for downward revision in new staff forecasts in Dec. pic.twitter.com/5zZVl80SB2
10.21am GMT
Eurozone growth has now slumped to its slowest rate since the second quarter of 2014.
BREAKING! #Eurozone economy grew just 0.2% in Q3 (0.4% expected), slowest pace since Q2 2014. pic.twitter.com/aOHdv4Tox9
10.11am GMT
The eurozone's annual growth rate has also fallen sharply, to 1.7% compared with 2.2% a quarter ago.
#Eurozone #GDP #growth slows more than expected to just 0.2% q/q in Q3, down from 0.4% q/q in Q2 & Q1 2018 according to #Eurostat preliminary flash estimate. Was 0.7% q/q in Q4 2017. Annual growth down to 1.7% in Q3 from 2.2% in Q2, 2.4% in Q1 2018 & 2.7% q/q in Q4 2017.
10.06am GMT
NEWSFLASH: Growth in the eurozone has halved, to just 0.2% in the last three months.
That's a sharp slowdown compared to the second quarter of 2018, and will fuel fears that the eurozone economy is faltering.
Italian GDP misses: stagnation in Q3 (+0.02% QoQ) and still 5% below pre-crisis levels. Material risk of a 'triple dip'. Economic reality comes at you fast. pic.twitter.com/aJ8h2MuBlC
9.38am GMT
Bloomberg says that today's Italian growth report is a blow to Rome's new leadership:
Italy's economy stalled for the first time in almost four years, putting pressure on the populist government's ambitious spending plans.
The stagnation in the third quarter followed growth of 0.2 percent in the previous three months and it leaves Italy as the underperformer among the euro area's major economies....
Italy's economy stalls for the first time in almost four years, putting pressure on the populist government's ambitious spending plans https://t.co/7wxyXIAPQ7 pic.twitter.com/ChbyPuI64Y
9.35am GMT
Italy's stock market has now lurched into the red, as today's weak growth figures shock investors.
The FTSE MIB index has fallen by 137 points, or 0.8%, to 18,900 points.
9.19am GMT
Italy's new coalition government only took control of the economy in June, so they must be disappointed that growth has promptly fizzled out.
There's even chatter that Italy could be flirting with another recession.
The first GDP print (QoQ) of the 5 Star-League government: Zero.
A poor start, and there could be worse to come. #Italy
Italy is now at risk of experiencing *three* recessions in just one decade.
Putting this another way annual GDP growth in Italy has fallen to 0.8% which does not compare well at all with the forecasts of the new government which have been as high as 3%. https://t.co/fcVAQAWGX2
9.15am GMT
Italian industry contracted in the last quarter, according to stats body Istat, helping to drag growth down to zero.
Domestic demand and net exports were both flat.
9.07am GMT
On an annual basis, Italy's economy only grew by 0.8% in the last year, down from 1.0%.
That's a thoroughly underwhelming result.
In line with French figures, Italian GDP came below expectations, confirming my view that the consensus and the ECB remain too optimistic about 2018 and 2019 GDP (see previous tweets).
#ITALY Q3 PRELIMINARY GDP Q/Q: 0.0% V 0.2%E; Y/Y: 0.8% V 1.0%E
9.06am GMT
BREAKING: Italy's economy stagnated in the last quarter, with no growth at all.
Italian GDP was flat in the third quarter of 2018, compared with Q2, new figures show.
*ITALIAN ECONOMY UNCHANGED Q/Q IN 3Q; EST. +0.2%
#Italy's economy stagnated in the third quarter
9.00am GMT
Newsflash: China's currency has dropped to its lowest level in a decade, as Beijing wrestles with its economic slowdown.
The yuan has been officially fixed at 6.9574 to the US dollar, its cheapest since the financial crisis of 2008.
Chinese yuan fixes at 6.9574 per $ on Tuesday, its weakest in over a decade. It's fallen 10% since March. pic.twitter.com/LLb9eIVQFN
8.57am GMT
Economist Shaun Richards points out that France's annual growth rate has dipped, despite picking up in the last quarter.
Better news for the economy of France as its GDP grew by 0.4% in the third quarter of the year matching the first half of it. However the annual rate fell from 1.7% to 1.5% https://t.co/QD4Zot3FBl
8.50am GMT
European stock markets have opened a little higher, as investors take today's French growth figures in their stride.
8.26am GMT
Royal Bank of Canada predict that German factories dragged eurozone growth down in the last quarter
They writes:
Our economists are looking for 0.4% growth, quarter-on-quarter, in the eurozone, in line with the ECB's staff forecasts. Manufacturing looks set to exert a large drag on activity in Germany this quarter.
7.50am GMT
French consumers spent more on travel over the summer, helping to grow the economy.
Transport expenses "bounced back markedly" in Q3, rising by 3.7%, stats body INSEE says.
7.41am GMT
Takeover News: Asian noodle bar chain Wagamama is being bought by the company behind the Frankie & Benny's and Chiquito brands.
Wagamama is a fantastic brand, with a market leading pan-Asian proposition, which has consistently outperformed the casual dining market in recent years.
Central to this success has been a cohesive culture and clear brand values which are focused on making the right choices for customers.
7.23am GMT
Economist and eurozone-watcher Fred Ducrozet says today's French GDP report looks healthy, even though growth wasn't quite as fast as hoped:
French Q3 GDP misses expectations, up 0.4% QoQ (consensus: 0.5%) but composition looks healthy. Consumption picked up; capex continued to expand; net exports up. Inventories subtracted 20bp to growth. pic.twitter.com/rank1XZGXO
French real GDP expanded by 0.4% q-o-q in Q3 2018, accelerating from 0.2%.
The details showed that:
- HH consumption recovered
- Investment grew almost as quickly as in the previous quarter
Overall, domestic demand accelerated
- Net trade contributed positively to growth pic.twitter.com/AJ14HWPZg1
7.07am GMT
French families helped drive growth over the summer, with household consumption jumping by 0.5% in Q3 (following a 0.1% drop in the second quarter).
Business investment surged by 1.4%, following a 1.3% rise in Q2 -- indicating that firms have been stumping up for new factories and machinery.
6.50am GMT
Newsflash: France's economy accelerated over the summer, but not by as much as expected.
French GDP rose by 0.4% in the third quarter of 2018, according to new figures from statistics body INSEE. Consumer spending and business investment pushed growth up.
6.46am GMT
Good morning. We're about to discover how the eurozone's economy is performing, in the face of economic and political threats at home and abroad.
New GDP figures for France, Italy, and the wider euro area for the third quarter of 2018 are released today.
Economists predict that eurozone growth remained subdued in the third quarter, buffeted by America's belligerence over trade war, Brexit uncertainty, and the Italian budget spat - to name just three threats.
Economists predict that eurozone growth came in around 0.4% in July-September, matching the modest expansion in April-June. But some in the City fear that growth may have dipped to 0.3% on a quarterly basis.
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