Eurozone economic activity has been mixed recently across sectors and countries.
- Final GDP growth printed slightly soft at +0.2% Q/Q in Q2. Momentum was uneven across the main countries. Manufacturing continues to struggle, retail sales have been weak, and sentiment is subdued. Services appear to remain a bright spot, however.
- The Eurozone labour market has shown some signs of cooling in recent months but remains resilient. Wage pressures moderated significantly in Q2. While unemployment remains at record lows, a pullback in job vacancies implies a reduction of demand-side pressure on the labour market. Productivity growth remains low.
- The ECB still sees considerable uncertainty in its rate path going forward beyond the all-but-certain September cut, with the Governing Council’s future decisions dependent on inflation and wage growth momentum.
- Growth in the Eurozone is projected to pick up in the coming quarters. But the pace of recovery will be subdued, as indicated by weak industry data and mixed sentiment.
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