In a worrying sign, German retail spending fell more than expected in September.
The Federal Statistics Office reports that retail sales dropped 2.2% last month, a bigger fall than expected.
It suggested that household spending is cooling, even before Germany goes into a new ‘light lockdown’ next week.
French GDP: What the experts say
Nadia Gharbi, senior economist at Pictet Wealth Management, says the French economy has bounced back from its Q2 slump – although it’s still smaller than before the pandemic:
Oliver Rakau of Oxford Economics says the 18.2% growth in July-September smashed forecasts…..
.. while Howard Archer of EY Item Club warns France could contract again before the end of the year:
French finance minister predicts 11% contraction this year
France’s finance minister, Bruno Le Maire, has warned that the fourth quarter of 2020 will be difficult.
Speaking on France Inter radio, Le Maire says the French economy is expected to contract by 11% in 2020.
That’s worse than an earlier forecast of a 10% contraction, Reuters points out, reflecting the impact of the second wave of Covid-19.
Spending by consumers and government lifted the French economy back to growth in the third quarter, INSEE explains.
Household consumption expenditure jumped +17.3% in Q3, and was only 2.1% lower than a year ago.
Government expenditure was 0.4% higher than a year ago, and jumped by 15.4% in Q3 alone (the cost of fighting the pandemic and stimulating the economy).
But business investment (Gross fixed capital formation) was sharply down (–5.1% year-on-year), despite rebounding by 23.3% in Q3.
Trade also made a positive contribution to GDP, with exports up 23.2% in July-September and imports only up 16.0%.
All very encouraging…. until you remember that France has just entered a new national lockdown that will slow the recovery sharply.
France: GDP jumps by 18.2%
Newsflash: France has got eurozone GDP day up and running, by posting stronger than expected growth for the third quarter of the year.
French GDP expanded by 18.2% in July-September, according to the new figures from statistics body INSEE.
That’s stronger than expected, and follows a 13.7% contraction in April-June.
But… it still leaves France’s economy smaller than before the pandemic started, as this chart shows:
In Q3 2020, GDP in volume terms bounced back: +18.2% after –13.7% in Q2 2020. Nevertheless, GDP remained well below the level it had before the health crisis: measured in volume, compared to its level in Q3 2019 (year-on-year), GDP of Q3 2020 was 4.3% lower.
Introduction: Eurozone GDP day
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Today we learn how well Europe’s economy fared over the summer, just as the second wave of Covid-19 cases threaten to push the region back into recession.
Eurozone GDP figures should show that the region has escaped recession, growing by an estimated 9.4% in the third quarter of 2020.
That would be the strongest growth on record, but only after the worst slump ever. Europe shrank by over 11% in April-June, remember, as tough lockdowns were imposed.
Returning to growth should be a cause of celebration, but probably not today, with France and Germany both heading into new lockdowns to battle the virus, which will slow growth sharply this quarter.
The latest eurozone unemployment figures, due at 10am GMT, are likely to show a rise in joblessness last month – perhaps to 8.3% from 8.1% in August.
Countries across the Eurozone will report GDP figures through the morning, so it will be a busy time. We also get Mexican GDP figures, and Canadian growth data for August, plus some UK housing data.
The markets, meanwhile, may be choppy. US stock futures are currently down 2%, as Covid-19 anxiety and US election worries weigh again.
As David Madden of CMC Markets explains:
This week there has been turmoil in European stock markets on account of the jump in the number of new Covid-19 cases and the rise in the hospitalisation rates.
The real damage to market sentiment was on the back of the stricter restriction in countries like Spain, Italy, France and Germany. Broadly speaking, the eurozone’s economic rebound was cooling – the manufacturing and services reports have disappointed.
Traders are wondering, what the currency area will look like in early December, when France’s and Germany’s lockdown should be over. The optimism of the summer has been replaced by a sense that it is going to be long winter.
- 6.30am GMT: French GDP for Q3 2020
- 7am GMT: Nationwide survey of UK house prices
- 8am GMT: Spanish GDP for Q3 2020
- 9am GMT: German GDP for Q3 2020
- 9am GMT: Italian GDP for Q3 2020
- 9.30am GMT: Portuguese GDP for Q3 2020
- 10am GMT: Eurozone GDP for Q3 2020
- 10am GMT: Eurozone unemployment data for September
- 10am GMT: Eurozone inflation data for October
- 12pm GMT: Mexican GDP for Q3 2020
- 12.30pm GMT: Canadian GDP for August