Market News

BY  Mark Schroers

(Bloomberg) -- The euro-area economy managed to eke out growth at the end of last year after all, with Eurostat revising up its initial estimate.

Gross domestic product increased 0.1% in the three months through December from the previous quarter, the European Union statistics office said on Friday. That compares with the zero growth that the agency reported on Jan. 30.

The unexpected expansion reflects the inclusion of more data from individual euro-zone countries. That includes the Netherlands, which is the bloc’s fifth-biggest economy and saw output increase by 0.4%. The picture for the other four majors is more mixed. While Spain grew 0.8%, Italy stagnated and Germany and France both contracted.

The European Central Bank expects headwinds to persist this year, but still see the conditions for a recovery in place. It predicts expansion will accelerate to 1.1% from 0.7% in 2024. The weakness of the economy is one of the factors cited by officials arguing for further interest-rate cuts.

The geopolitical situation is also weighing on the outlook, with US tariffs on European goods a particular risk. President Donald Trump on Thursday ordered his administration to consider imposing reciprocal tariffs on numerous trading partners and also floated auto levies — a move that would be a particular hit to German carmakers.

What Bloomberg Economics Says...

“The big picture remains that growth momentum has faded, and the euro area faces profound risks from US trade policy. How long the economic soft patch persists will be a key driver of the ECB rates outlook.”

—Jamie Rush, chief European economist. For more, click here

Employment growth slowed in the final quarter, Eurostat said. It stood at 0.1%, down from 0.2% in the previous period.

--With assistance from Barbara Sladkowska and Joel Rinneby.

(Updates with BE after fifth paragraph)