Deutsche Bank analysts note euro area GDP is tracking around 0.2–0.3% QoQ, with PMIs showing a narrowing gap between core and periphery. Domestic demand and services remain the main growth engines, while manufacturing and industrial production are weak but volatile. Analysts expect Q4 GDP to avoid downward revision despite soft December IP.

Resilient demand versus industrial weakness

"The final January Composite PMI data points to a slight slowdown in the euro area at the start of the year, though the implied Q1 GDP growth outlook remains steady at around 0.2% QoQ."

"This trend reinforces the narrative of a two-speed economy, with domestic demand as the main engine of growth."

"The country data available so far (including Portugal at -2%) implies a -2.3% MoM for the euro area IP print."

"While the monthly decline was large, IP for the quarter will still be positive, but there will be a negative carry over for Q1 estimated at -1.3% QoQ."

"Despite the significantly weak in December industrial production, it seems unlikely to lead to a downward revision of Q4 GDP growth for the euro area."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)