FRANKFURT • The euroarea economy enjoyed broad based growth at the end of last year that was only weighed down by a change in inventories.
Private and government spending accelerated, investment expanded at a solid pace and trade made a positive contribution to GDP. Growth was confirmed at 0.2% in the fourth quarter (4Q), while a reading for the previous three months was revised down to 0.1%.
Paired with a pickup in employment and robust pay gains, the report offered some positive news for European Central Bank (ECB) officials meeting in Frankfurt yesterday in an otherwise gloomy environment.
Household consumption, government spending and investment added 0.1 percentage point each to GDP growth, while trade contributed 0.2 point. Inventories subtracted 0.4 point, as German carmakers started shifting stocks after disruption over the summer.
A strong labour market also fed through to workers’ compensation, which rose 2.2% in 4Q. That offered encouraging signals for policymakers struggling to lift inflation, even though weaker demand in manufacturing is causing a slowdown in input costs as well as output charges.
Purchasing Managers’ Indexes for services also offered signs of comfort.
Gauges for the region’s top three economies improved this week. Retail sales rebounded at the start of the year. — Bloomberg