Eurozone grows 0.3% at the start of the year, industrial output soars
The eurozone economy expanded by 0.3% in the first quarter of 2025 on a quarter-over-quarter basis, according to a second estimate from Eurostat released on Thursday.
This marks a slight acceleration from the 0.2% growth recorded in the final quarter of 2024, but represents a minor downward revision from the initial flash estimate of 0.4%. On an annual basis, the euro area's gross domestic product (GDP) rose by 1.2%, consistent with earlier readings and in line with economist expectations.
Among member states for which data is available, Ireland posted the highest quarterly growth rate at 3.2%. Spain again proved resilient among major economies with 0.6% growth, ahead of Italy (0.3%), Germany (0.2%) and France (0.1%).
By contrast, economic contraction was recorded in Portugal (-0.5%) and Slovenia (-0.8%).
Labour market conditions appear to be improving, with eurozone employment rising by 0.3% quarter-on-quarter in the first three months of the year.
This surpassed both expectations and the previous quarter's 0.1% gain. On an annual basis, employment was up 0.8%, matching consensus forecasts.
A strong performance in industrial output added to signs of economic momentum. In March, eurozone industrial production jumped by 2.6% on a month-over-month basis, marking the sharpest one-month gain since November 2020. The figure beat expectations of a 1.8% rise and followed a revised 1.1% gain in February.
Eurostat data revealed robust monthly increases in capital goods (3.2%), durable consumer goods (3.1%) and non-durable consumer goods (2.3%). Intermediate goods saw a more modest rise of 0.6%, while energy production dipped 0.5%.
Among member states, Ireland led industrial output growth with a 14.6% surge, followed by Malta (4.4%) and Finland (3.5%). Meanwhile, output fell in Luxembourg (-6.3%), Denmark and Greece (both -4.6%), and Portugal (-4.0%).
On an annual basis, eurozone industrial production rose by 3.6%, its highest rate since 2022.
The March industrial rebound can be attributed to two key factors: the announcement of an €800 billion German fiscal stimulus focused on defence and manufacturing, and a pre-emptive surge in European exports to the United States ahead of anticipated tariff hikes under Donald Trump's proposed trade policy.
The euro rallied on Thursday's economic data, with the euro-dollar exchange rate climbing above 1.12, recouping earlier weekly losses.
Bond markets remained stable, with German 10-year Bund yields hovering at 2.67% and two-year Schatz yields slipping slightly to 1.91%.
European equities were subdued following a week of strong gains, as investor sentiment was tempered by mixed corporate earnings.
The Euro STOXX 50 index was down 1.1% by mid-morning, dragged lower by underwhelming results from several large-cap firms. Shares of Siemens fell 2.4% after the engineering giant cited increased uncertainty in the economic environment and reaffirmed its full-year guidance. Allianz also slipped 2.5% following a weaker-than-expected earnings report.
Luxury stocks continued to struggle amid concerns over slowing demand in China. Kering declined by 3.9%, while LVMH lost 2.4%, extending recent losses across the sector.
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