Eurozone growth beat forecasts, unemployment eased, ECB likely to pause, supporting global stability but offering limited upside amid ongoing uncertainty.
The eurozone economy grew at a steady 0.3% quarterly pace in the fourth quarter, according to a preliminary flash estimate released by Eurostat. The growth came in ahead of the 0.2% rate forecast by economists.
Euro Area Grows At Stable Rate: The regional economy’s growth has been stuck at a sub-0.5% pace since the third quarter of 2022.
Source: Eurostat
Germany, and Italy, Europe’s first- and fourth-largest economies, respectively, grew 0.3% quarter over quarter, while France, the third largest, expanded at a slightly slower pace.
On a seasonally adjusted year-over-year basis, the 21-nation economy that shares the euro as the common currency grew 1.3%, slightly slower than the 1.4% growth in the third quarter. The growth, however, was better than the 1.2% consensus estimate.
The European Union (EU), a political and economic union comprising 27 member nations, expanded at a slightly better 0.4% quarterly pace and a 1.6% annual rate.
For 2025, the eurozone grew 1.5% even amid tariff turbulence, and the EU a notch better at 1.6%.
Economists See Acceleration: ING economists expect the eurozone economy to see accelerated growth over the coming quarters. They based their optimism on the January sentiment reading, which reached the highest level in three years, and the beginning of industrial production revival from the end of last year.
That said, the economists sounded out caution regarding global uncertainty and the loss of the eurozone's competitiveness. “But the domestic boost should be enough to expect a modest acceleration of growth for the eurozone, which is already quite something in this environment of significant turmoil,” they said.
Jobless Rate Ticks Down: Separately, Eurostat reported that the euro area’s jobless rate edged down to 6.2% in December compared with 6.3% in November. Economists had expected the jobless rate to remain steady in December. The EU jobless rate remained steady at 5.9%. The unemployment rate has stabilized at a little over 6% since late 2024.
Source: Eurostat
The youth unemployment rate was at an elevated 14.3% in the euro area and 14.7% in the EU. Among countries, the total jobless rate was the highest in Finland (10.2%) followed by Spain (10%) and Sweden (9%). Malta and Germany recorded the lowest unemployment rates, at 3.2% and 3.8%, respectively.
Data Supports Case For Extended Pause? The European Central Bank’s (ECB) Governing Council is set to meet for a two-day monetary policy meeting on Feb. 4-5 in Frankfurt. ING sees the ECB maintaining the status quo monetary policy stance at next week’s meeting. The firm, however, expects the recent strengthening of the euro to revive debate about another rate cut.
Takeaways For Futures Traders:
- The EU’s in-line economic performance could be mildly positive for stock futures such as the E-mini S&P 500 futures (ES) and the Nasdaq 100 futures (NQ), given the positive impact on U.S. multinationals having European exposure, and the abatement of fears of an across-the-board global economic slowdown.
- An ECB pause alongside a dovish new Fed chair could create rate divergence, pressuring commodity futures.