Europe’s moribund economic prospects got a slight boost on Wednesday from data showing France’s economy grew more than expected in the third quarter.
The bloc’s second-largest economy expanded 0.3% QoQ from Q2, better than the 0.2% consensus expected. The range was +0.1% to +0.4% from 39 economists.
France isn’t as exposed to slumping global demand and the vagaries of the trade war as Germany, which accounts for some of the economy’s resilience.
Perhaps not surprisingly, the better-than-expected numbers came courtesy of domestic demand, as government spending and households helped offset external headwinds. Net trade was a drag.
(Goldman)
And yet, it’s not all good news in France. Manufacturing confidence is in the gutter and PMIs are well off levels seen prior to the global economic downturn and the yellow vest protests.
Meanwhile, the DIHK Chambers of Industry and Commerce said Wednesday that German exports are on track to shrink next year for the first time since the crisis.
DIHK President Eric Schweitzer painted a somewhat dour picture.
“For our economy, with its strong industrial core, this is a huge challenge”, he said, detailing the effects of falling global growth, Donald Trump’s adversarial, protectionist trade policies and persistent Brexit uncertainty.
DIHK now sees Germany’s annual export growth slipping to just 0.3% this year from 2.1% in 2018 and shrinking by 0.5% next year. DIHK also cut its 2019 GDP outlook for Germany to just 0.4%. Earlier this month, the German Economy Ministry slashed its projection to 0.5% for 2019.
“Since the financial crisis of 2008/2009, the DIHK has not received such pessimistic replies from the companies”, Schweitzer went on to say, adding that in normal times, Germany’s average export growth is roughly 5.5%.
Also on Wednesday, data showed German jobless claims started rising again, jumping 6,000, well more than consensus was expecting.
“The recent economic weakness is leaving its marks on the job market. But all in all, it still proves to be robust”, the Labour Office remarked.
