Euro zone growth curbed by trade, retail sales sharply

Containers and cars are loaded on freight trains at the railroad shunting yard in Maschen near Hamburg 23 September  2012 - Reuters 

Brussels (Reuters): The euro zone economy grew at a modest pace in the third quarter with a negative impact from trade, while retail sales fell at their sharpest rate this year in October, data showed on Thursday.

Gross domestic product (GDP) in the 19 countries sharing the euro was up 0.2% in the July-September period, the same figure as the flash estimate released in October and unchanged from the second quarter.

Retail sales in the euro zone in October fell by 0.6%, double the amount expected in a Reuters poll, and were up a modest 1.4% year-on-year. The monthly decline was the steepest fall of 2019.

The data confirmed a sombre outlook for the single currency bloc, which is facing threats and uncertainty over Brexit and rising global trade conflicts.

Britain had been set to exit the European Union at the end of October, a deadline since pushed back until the end of January.

In trade, the United States outlined the first phase of a deal to end its conflict war with China in October, but the two are still arguing about the details. Year-on-year, euro zone expansion was 1.2%, also the same figure as in the second quarter of the year. The bloc’s largest and third largest economies, Germany and Italy, grew by just 0.1% during the quarter, while in France, the second largest economy, growth was 0.3%.

Household spending was the strongest overall contributor, boosting euro zone growth by 0.3% percentage points, followed by government spending and capital investment at 0.1 points.

However, the contributions of trade and of inventory changes were negative, in the case of trade for a second consecutive quarter.

In the October retail sales figures, non-food sales declined, particularly online and mail order sales, although these tend to pick up in November and December ahead of the Christmas period.

Eurostat also said that the growth of employment in the euro zone slowed in the third quarter to 0.1% from 0.2% in the second quarter. Year-on-year the figure was also softer at 0.9% from 1.2% previously.