A jump in inventories and exports drove the euro zone out of recession in the third quarter with some help from government spending despite falling investment and household consumption, data showed today.
The European Union's statistics agency confirmed its earlier estimate that the economy of the 16 countries using the euro expanded 0.4 per cent quarter-on-quarter in the July-September period, after five quarters of falling output.
The growth ended the deepest economic downturn in Europe since World War II, brought on by a global financial crisis, but economists say recovery is likely to remain fragile.
The European Commission expects fourth-quarter growth to slow to 0.2 per cent quarter-on-quarter, followed by an expansion of 0.1 per cent in each of the first two quarters of 2010.
It sees growth accelerating steadily from the third quarter of 2010 to reach 0.5 per cent in the second quarter of 2011.
The data comes as the European Central Bank meets on interest rates amid market expectations it will leave borrowing costs at a record low of 1 per cent well into 2010 to ensure recovery takes hold in the absence of inflationary pressure.
Eurostat said a build-up of inventories, depleted in the first half of the year, added 0.3 percentage point to the overall quarterly growth result for the euro zone.
Exports and imports jumped in the third quarter, but exports increased more and net trade added 0.2 percentage point to the final outcome.
Government spending added 0.1 percentage point while household demand and investment subtracted 0.1 percentage point each.
The weakness of household consumption was reflected also in below-consensus retail sales in the euro zone in October, separate data from Eurostat showed today.
Retail sales were unchanged month-on-month and down 1.9 per cent year-on-year, below market expectations of a 0.2 percent monthly increase but better than the forecast of a 2.4 per cent annual decline.
Sales of food, drinks and tobacco fell 0.3 per cent month-on-month while sales of non-food products, except car fuel, rose by the same amount.
Reuters