Euro area: Growth soft but still resilient – Societe Generale

Societe Generale economists report that February Euro area activity and labour market data were slightly disappointing but within normal ranges, with unemployment at 6.2%. German industrial jobs continue to decline and retail sales fell, while French consumer spending weakened mainly on energy and clothing. Nonetheless, they maintain a forecast of low but positive French real GDP growth of 0.1% quarter‑on‑quarter in 1Q.

Soft indicators yet no sharp downturn

"Finally, activity & labour market data in February were slightly disappointing but well-inside the usual range. Euro area unemployment gained one-tenth to the still very low level (for Europe) of 6.2%. Germany is still shedding industrial jobs at a decent pace (-2.7% yoy) though the unemployment rate is stable at 4.0% and retail sales there declined 0.6% mom."

"As for France, real consumer spending on goods surprised to the downside with a 1.4% mom fall. Excluding energy, spending is only down 0.2% in January/February vs 4Q so pointing more to continued stagnation rather than a change of trend for the worst."

"Mild temperatures and a change in the timing of sales have played a clear role with energy spending down 2.4% and clothing spending down 4.0%. Excluding energy, spending is only down 0.2% in January/February vs 4Q so pointing more to continued stagnation rather than a change of trend for the worst."

"Mild temperatures also led to lower French industrial production in February (-0.7% mom). Manufacturing production was stable but, with the January level revised down 0.4pp, the growth carry-over so far in 1Q is slightly negative. Those data are in line with our forecast of low real GDP growth in France in 1Q (0.1% qoq)."

"We will also get industrial output for Spain (Thursday) and Italy (Friday). Finally, euro area retail sales (again for February) out Wednesday are unlikely to impress given German and French disappointing results."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)