4th Quarter GDP Numbers for France and Germany Fail to Impress

It was a busy start to the day on the Eurozone economic calendar. Member state GDP numbers for the 4^th quarter were in focus early in the European open.

The French Economy

In the 4^th quarter, the economy expanded by 0.7% following 3.1% expansion in the previous quarter. Economists had forecast 0.5% growth.

According to Insee.Fr,

• Final domestic demand (excl. inventories) contributed 0.5 points, supported by both household consumption expenditure (+0.4%) and gross fixed capital formation (+0.5%).
• Trade terms weighed, however, with imports up 3.6%, while exports rose by 3.2%, resulting in a negative contribution to GDP (-0.2 points).
• The contribution of inventory changes to GDP growth was positive (0.4 points).

The German Economy

According to Destatis, the German economy contracted by 0.7% in the 4^th quarter, after having expanded by 1.7% in the previous quarter. Economists had forecast a 0.3% contraction. Year-on-year, the economy grew by 1.4%, falling short of a forecast of 1.8%. In the 3^rd quarter, the economy had also expanded by 2.8% year-on-year.

Other stats

French consumer spending and Spanish GDP numbers had a muted impact on the EUR.

In December, French consumer spending increased by just 0.2%, which was in line with forecasts. Spending had risen by 0.9% in November.

For the 4^th quarter, Spain’s economy expanded by 2.00% quarter-on-quarter, easing from 2.6% growth in the previous quarter. Economists had forecast 1.4% growth.

Market Impact

Ahead of today’s stats, the EUR had risen to a pre-stat and current day high $1.11559 before hitting reverse.

In response to today’s stats, the EUR rose to a post-stat high $1.11548 before sliding to a post-stat and current day low $1.11215.

At the time of writing, the EUR was down by 0.08% to $1.11362.

Next Up

Personal spending and inflation figures from the U.S will be in focus. With the FED ready to make its first move as early as March, today’s stats could pencil in more than 4 hikes for the year.