Eurozone GDP growth downgraded in first quarter but employment holding up

Unemployment has been holding at record lows all year

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Published Thu, May 15, 2025 · 06:37 PM

Gross domestic product in the first three months grew by 0.3%, below an initial estimate for 0.4%. PHOTO: REUTERS

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[FRANKFURT] The eurozone economy grew slower in the first quarter than initially estimated but employment held up well, indicating that the bloc keeps creating jobs despite years of anaemic expansion, data from Eurostat showed on Thursday (May 15).

Gross domestic product in the first three months grew by 0.3 per cent, below an initial estimate for 0.4 per cent, but that was still an improvement on previous quarter as industry finally expanded and employment growth also picked up.

Compared with a year earlier, the bloc’s economy expanded by 1.2 per cent, the same as three months earlier, broadly in line with what the ECB considers the bloc’s potential.

While the eurozone has consistently underperformed the US in recent years, the 0.3 per cent quarterly growth rate is far better than the 0.3 per cent contraction reported in the US, which in great part was a reflection of surging imports ahead of tariffs.

Eurozone employment, meanwhile, expanded by 0.3 per cent compared with the previous quarter, the highest figure in four quarters, likely easing fears that weak growth could finally prompt firms to start shedding workers.

Unemployment has been holding at record lows all year, confounding some expectations that, with no prospect for a meaningful rebound in growth, firms could reassess their plans to keep hanging on to workers.

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Manufacturers managed to increase their profit margins as input costs declined for the first time since November while output prices rose at their fastest rate in two years.

Eurozone manufacturing showed more signs of stabilisation in April

Germany, Europe’s largest economy, grew by just 0.2 per cent, while France expanded by 0.1 per cent and Italy by 0.3 per cent.

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The 19,000 consumers were asked if they would look for alternatives to US products if an import tax of 5 per cent, 10 per cent or 20 per cent was imposed by the US.

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European Central Bank board member Isabel Schnabel said that real income grew in over half of all households in the euro area last year but that an ECB survey of consumers showed that only 11 per cent perceived that increase.

Euro zone consumers may be put off by inflation ‘misperception’: ECB’s Schnabel

Compared with a year earlier, eurozone economy expanded by 0.9 per cent, the same as in the previous quarter but a modest expansion from earlier quarters.

Eurozone economy fared a touch better than first estimated in Q4, data shows

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Among the bloc’s biggest economies, Germany grew by 0.2 per cent, France by 0.1 per cent, Italy by 0.3 per cent and Spain by 0.6 per cent compared to the previous quarter. REUTERS

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