Based on data up to early December, the Q4 2018 Eurozone GDPnowcast points to economic expansion of 0.3% q/q, a level slightlybelow the post- financial crisis trend rate (0.36%). However, giventhe prior distortion to growth from the auto sectoremissions-related drag on German output, IHS Markit currentlyanticipates the economy will grow by 0.4% q/q.
Survey data continue to soften heading into year end. The Eurozone Composite PMI dropped in November to its lowest levelfor over two years, dragged down by worries over global tradetrends and political worries around Brexit. Business confidence wasat its lowest in nearly four years, whilst separate figures showconsumer confidence at a 20-month low. Although our EZ EconomyTracker (which uses principal components analysis (PCA) to estimatea single 'factor' index from the 36 variables used to nowcast EZeconomic output) improved slightly in November, it remains close toOctober's 26-month low.
Whilst survey data continue to show a slowdown inunderlying growth, we are keen to see official dataupdates for the start of Q4 (especially industrial production) toassess whether the weakness related to autos production thatimpacted on Q3 data proves to be transitory.
Indeed, when observing similar-sized model 'surprises' to theone seen in the third quarter, growth in the following three-monthperiod has tended to overshoot the respective nowcast.
And with German car production figures for October showingstrong year-on-year expansion, GDP growth may well be firmer thanis currently being implied by the current nowcast.