Eurozone economic growth slows as China slumps

The German economy gained modest ground in the second quarter, expanding by 0.4 per cent compared with 0.3 per cent in the first three months of the year, but the French economy ground to halt. Output had been expected to rise by 0.2% following growth of 0.7% (revised up from 0.6%) in the first quarter.

“After a very dynamic first quarter, the level of activity has held up”, he said.

Growth in consumer spending-the main driver of the French economy-slowed to 0.1% in the second quarter from 0.9% in the first. “Inventories have likely shaved off a bit of growth in the second quarter, but this actually bodes well for the second half, as industrial orders remain strong according to the European Commission’s business survey”.

In Italy, GDP added a mere 0.2 percent, boosted by services but dragged down by a struggling manufacturing sector. In France, unemployment has been above 10% for more than two years and public debt is at a record high-more than 97% of annual economic output. Conversely, changes in inventories contributed negatively: -0.4 points after +0.3 points in the previous quarter.

France saw no growth at all in the second quarter.

German GDP increased 0.4 percent, up from 0.3 percent in the first quarter. On the contrary, Finland registered a negative GDP growth -0.4%, being the only country with a shrinking economy in Europe.

Investment in housing, however, contracted for the eighth quarter in a row. It was the first growth in three quarters.

Separately, final data from Eurostat today confirmed 0.2 percent inflation in the currency bloc for July, the same rate as seen in June. The statistical office confirmed the flash estimate released on July 31.

Given the stimulus from lower energy prices and the policy of quantitative easing (purchasing assets by creating money) pursued by the European Central Bank (ECB) since March, the renewed weakness in the euro zone’s second- and third-biggest economies is troubling. Inflation is expected to be at 0.3 percent.