Eurozone Economies Expand As Germany Averts Recession

Most of the euro area’s largest economies expanded in the third quarter — with even Germany avoiding the recession it was widely expected to endure, Alexander Weber, James Regan, and William Horobin reported for Bloomberg News.

The recent data may ease some concerns about Europe’s economy.

Growth quickened in France and held steady in Spain, exceeding expectations. Germany’s surprise 0.2% increase in gross domestic product caught analysts off guard, although the reading for the previous three months was revised down sharply.

The weak point was Italy, where output was unexpectedly flat.

On the inflation front, separate data from Spain showed consumer-price gains accelerating slightly to 1.8% but remaining within the European Central Bank’s 2% target.

The recent data may ease some concerns about Europe’s economy, which were highlighted last week when finance officials gathered in Washington for the International Monetary Fund’s meetings.

Some ECB policymakers argued that the worsening outlook could necessitate more significant interest-rate cuts, while others urged caution. The euro jumped, and German bonds erased gains.

Traders reduced bets on ECB rate cuts, pricing around a 25% chance of a half-point cut in December.

Earlier this month, the implied probability was 50%, according to swap pricing. The common currency traded 0.3% higher at $1.0859, while the 10-year German yield remained flat at 2.34%.