Fra BNP Paribas
Eurozone: German final Q3 GDP and German and French business surveys We expect the final GDP numbers for Q3 to confirm that German growth slowed to 0.2% in Q3 after increasing by 0.4% in Q2. The expenditure breakdown is likely to show that private and government consumption added to growth, whereas the contribution from net trade was negative. Comments by the Federal Statistics Office suggest that machinery and equipment investment was weak in Q3, again, after disappointing already in the second quarter. Looking ahead, we continue to expect that the German economy is going to be supported by domestic demand. Private consumption should benefit from some upward momentum in wages and a solid labour market, while robust demand for private housing is likely to support construction investment. Against this background, the economy should rebound in the final quarter. Recent business surveys appear to confirm that German and eurozone growth should pick up in Q4; the eurozone composite PMI rose by 0.8 pts in November to its highest point this year, while the German equivalent consolidated much of the gain seen in October. We expect the German Ifo and the French Insee surveys, which are to be published on Thursday, to confirm the improving trends.
According to our forecasts, both surveys are likely to show a slightly better reading in November, with the Ifo ticking up to 110.8 after 110.5 in October. That said, while the German composite PMI remained at a high level in November, the manufacturing index softened a little, implying some downside risk for the Ifo, which is a manufacturing-based survey (Chart 1).
