Euro Zone Growth Confirmed at 0.4% in Third Quarter as France Contracts and Employment Stalls

The euro zone economy grew 0.4% in the third quarter of 2026, slowing from 0.6% in the second quarter, as stronger output in Spain and the Netherlands was offset by a small contraction in France and flat activity in Italy. Eurostat, the statistical office of the European Union, published its second flash estimate for July through September on Friday, Nov. 13, 2026, and left the quarterly growth figure unchanged from its preliminary reading on Oct. 30.

Compared with the same quarter a year earlier, seasonally adjusted gross domestic product in the 21-country currency bloc rose 1.3%, up from 1.2% in the second quarter. Across the wider 27-member European Union, GDP expanded 0.5% from the previous quarter and 1.5% from a year earlier. Both the euro area and EU rates matched the preliminary estimates, RTTNews reported.

Hiring stalls

The release also contained the first estimate of third-quarter employment. The number of people in work was unchanged in both the euro area and the EU compared with the second quarter, when employment had risen 0.1% in each. On an annual basis, euro area employment growth eased to 0.4% from 0.5%, while EU employment growth held at 0.4%.

Eurostat said the GDP flash figures are based on member-state data covering 97% of euro area and EU output, while the employment figures cover 95% of euro area employment and 92% of EU employment. The agency said all figures may be revised with its regular estimates scheduled for Dec. 7, 2026, and Jan. 19, 2027.

Uneven performance across member states

Country data in the release showed a wide gap among the bloc's largest economies. Spain grew 0.6% in the quarter and 2.7% from a year earlier, and the Netherlands also expanded 0.6% on the quarter, lifting its annual growth rate to 2.1%. Germany, the region's biggest economy, grew 0.2%, after 0.3% in the second quarter, and was 1.2% larger than a year before. Italy recorded no growth in the quarter, leaving its annual rate at 0.8%.

France was the weakest of the four, with output falling 0.1% from the second quarter and 0.1% from a year earlier. According to the first estimate from French statistics agency INSEE, household consumption accelerated to 0.4% and government spending rose 0.3%, but gross fixed capital formation, a measure of investment, fell 0.6% and exports dropped 1.7%, so that foreign trade subtracted 0.6 percentage point from growth. INSEE is scheduled to publish more detailed third-quarter figures on Nov. 27.

Among smaller economies, Ireland reported quarterly growth of 5.5%, a figure Eurostat flagged as experimental and particularly prone to revision. Cyprus and Finland each grew 0.5%, Belgium 0.3%, and Austria and Portugal 0.2%, while Lithuania contracted 1.0%. Outside the euro area, Poland expanded 0.8% and Romania 2.1%. For comparison, Eurostat's table showed U.S. GDP rising 0.8% from the previous quarter and 2.1% from a year earlier.

Inflation and the ECB backdrop

The growth figures arrive as price pressures in the currency bloc are building. Euro area annual inflation rose to 4.0% in October from 3.8% in September, according to Eurostat's flash estimate, the first time it has reached that level since September 2023, as energy inflation climbed to 20.8%, CNBC reported. Europe, a net energy importer, has seen prices rise steadily since the start of the Iran war, the network noted.

The European Central Bank kept its three key interest rates unchanged on Oct. 29, leaving the deposit facility rate at 2.50%, the main refinancing rate at 2.65% and the marginal lending rate at 2.90%. The Governing Council said rising energy prices pose upside risks to inflation and downside risks to growth, that underlying inflation had remained broadly stable and that wages showed no material response so far. It added that financing conditions had tightened and that it was not pre-committing to a particular rate path.

The October hold followed a quarter-point increase in September. After the October inflation figures were released, markets were pricing in a more than 72% chance of a rate increase at the ECB's final meeting of the year in December, according to CNBC.

What comes next

Friday's release keeps the euro area on a modest growth path heading into the final quarter of the year. Eurostat's next detailed national accounts update is due on Dec. 7, and the ECB's December policy meeting will be the next test of how policymakers weigh slowing growth, flat employment and inflation running at twice their 2% target.