Euro zone economic growth trimmed to zero at end of 2022

The euro zone failed to register any growth quarter-on-quarter in the final three months of 2022, the EU statistics agency said on Tuesday, slightly revising down both its GDP and employment growth numbers, although the latter remained strong.

Euro zone economic growth was 0.0 per cent in the fourth quarter compared with the third and 1.8 per cent from a year earlier, Eurostat said in a statement. That compared with flash estimates of 0.1 per cent and 1.9 per cent published on February 14th.

The revisions still confirmed that the euro zone narrowly avoided the technical recession that had previously been expected. Greece, Malta and Cyprus all registered quarterly growth of more than 1 per cent, with declines seen in Germany, Estonia, Italy and Lithuania.

Last week, the Central Statistics Office revised down a previous estimate that Irish GDP expanded by 3.5 per cent in the last three months of 2022 to 0.3 per cent growth.

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Eurostat said that public expenditure contributed 0.2 percentage points, changes in inventories 0.1 points and net trade 1.0 points. The negatives were household spending and gross fixed capital formation.

Eurostat also revised down the figure for employment growth in the euro zone to 0.3 per cent quarter-on-quarter from a previously reported 0.4 per cent. The year-on-year number was 1.5 per cent, in line with earlier estimates. This pushed the total number of people with jobs to 165 million, 3.6 million more than at the end of 2019, just before the Covid-19 pandemic struck.

Strong employment growth highlights how tight the labour market is and signals a problem for the ECB in its fight to bring inflation back to 2 per cent from double digit territory last autumn. A recession had been expected to boost the jobless rate, cooling the labour market and keeping a lid on wages. But firms, which struggled to rehire workers after the pandemic, appear to be hanging on to staff even through a slowdown. – Reuters

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