Watch Your Language

European economic data was poor

Image source: Julinzy, Kues, Krakenimages.com, LEDOMSTOCK - Shutterstock

What's going on?

Europe had una catástrofe on Friday: a flurry of nicht gut economic data showed growth in its major economies is – how do you say – merde.

What does this mean?

New data revealed the eurozone’s economy grew just 0.1% last quarter – slower than the 0.2% investors were expecting. And that was down to a whole host of problèmes across its major economies.

Just look at Italy: its economy shrank 0.3% last quarter, when it was actually forecast to grow by 0.1%. Things were similarly désagréable in France, where a series of strikes (quelle surprise) seems to have killed the country’s vibe: the economy shrank last quarter, dragging annual economic growth down from 2018 levels. And over in Germany, December retail sales fell 3.3% from a month earlier – significantly worse than the 0.5% growth investors were hoping for. Only Spain saw economic growth pick up, but even that was its weakest since 2014. No me gusta.

Why should I care?

For markets: Très interessant…
Investors in France might want to take this data with a pinch of salt. One of the reasons the country underperformed last quarter was because companies were clearing out their inventories rather than making new products. Without that hopefully one-off occurrence, growth would’ve actually been positive – perhaps why investment bank Barclays remains “cautiously optimistic” about France’s future. What’s more, investors reckon the weak data might encourage Europe’s central bank to cut interest rates – despite increasing inflation.

The bigger picture: Y’all seeing this?
The situation was better in the US, where the economy grew 2.3% last year. But that’s still below 2018’s 2.9% increase, and well below the 3% growth the US government expected its tax cuts to stimulate. Things don’t look like they’ll pick up much this year, either: growth is forecast to slow to just 1.8%. And with November’s election looming, that could prove a sticking point for the sitting US president…

Originally posted as part of the Finimize daily email.

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