Euro zone GDP jumps more than expected in third quarter, October prices fall

BRUSSELS (Oct 30) - The euro zone economy rebounded more than expected in the third quarter from its coronavirus-induced slump, but the rally is likely to be cut short as countries re-introduce restrictions to stem the second wave of the pandemic.

Gross domestic product in the 19 countries sharing the euro surged 12.7% quarter-on-quarter in the third quarter after contracting 11.8% in the second, according to the European Union’s statistics office, Eurostat. Economists polled by Reuters had expected a 9.4% quarterly rise.

The euro zone average was boosted mainly by France, Italy and Spain, which all registered quarterly growth between 16.1% and 18.2%, EU statistics office preliminary data showed.

Year-on-year, however, euro zone economic output was still 4.3% lower, though an improvement on the 14.8% annual contraction in the previous three months. That beat market expectations of a 7.0% year-on-year decline.

Germany, the euro zone’s biggest economy, grew 8.2% quarter-on-quarter. The increase led Germany to revise its economic forecast for the year to a 5.5% contraction, instead of the 5.8% it had expected earlier.

Consumer prices continued to fall in October, as expected, Eurostat estimated, pulled down by plunging energy costs despite more expensive food, alcohol and tobacco.

Consumer prices in October were 0.3% lower year-on-year, as expected by economists polled by Reuters, the same rate as in September, after a 0.2% month-on-month increase.

Energy prices plunged 8.4% year-on-year, offsetting a 4.3% rise in unprocessed food prices.

Euro zone unemployment was flat in September from August at 8.3% of the workforce, as expected, despite edging higher in absolute numbers by 75,000 people.

Reuters