Final euro area GDP numbers on the tap

The final and second reading of the 3Q GDP estimate is due today, along with the sector breakdown. The pace is likely to remain close to the advance estimates, as growth slowed to 0.3% (QoQ, sa) from 2Q's 0.4%. This translated to 1.6% YoY in 3Q and 1.5% average in 1Q-3Q. Today's data breakdown is likely to see domestic demand fare better as the external sector faces slowing global demand despite a weak euro. The European Commission's economic sentiment indicator edged back to four-year highs, while industrial confidence neared a six-quarter high. Inflation continues to ease on a combination of weak cost-push and demand conditions. 

High unemployment rates and tepid wage growth however point to slack in the economy, keeping a lid on price pressures. Industrial production declined 0.3% QoQ in Sep, setting 3Q to near flat growth. Investment spending trends are looking up, but sluggish capacity utilisation and weak credit growth suggest underlying momentum remains tentative. Externally, exports stabilised at 6% pace in 3Q while slower imports led the trade surplus to widen, lending a hand to the current account balances. 

Citing this marginally softer growth and weak inflation, the ECB extended QE by six months and cut the deposit facility rate last week. While monetary stimulus is required it is insufficient to materially alter the growth and inflation outlook.