The ECB has repeatedly argued that consumer spending would increasingly support growth amid slowing inflation and rising real incomes, and is likely to take the news as vindication of that argument.

Nationally, Germany, Spain and France posted better-than-expected growth, while Italy came in below expectations. Ireland was the best performer with a 2% increase, while Spain rose 0.8%. This was helped by a sharp increase in tourist arrivals, a reflection of the continued strength of “revenge spending” for travelers since the end of the pandemic. In the first eight months of the year, Spain received more than 64 million tourists, according to the country’s statistics agency, the highest figure since records began.

The French economy also showed surprising vitality, rising 0.4 percent, mainly due to extra activity generated by the Olympics in August. In contrast, Italy did not grow at all, due to a pronounced decline in production.

Germany rose 0.2 percent in the quarter, confounding expectations for a small contraction. Statistics agency Destatis attributed this to strong public and private consumption. The latter has been hard to track this year as the country has not released spring retail sales data. But the latest data on consumer sentiment appears to corroborate Destatis’ picture: GfK’s forward-looking index for November, released on Tuesday, hit its highest level since April 2022. Both income expectations and, crucially, willingness to buy they improved for the second. month in a row.

However, the German surprise was offset by a large downward revision to second-quarter data to show a contraction of 0.3%, which was more in line with sustained weakness in industrial production and orders data during that period.

Berenberg Bank Chief Economist Holger Schmieding warned clients not to get too carried away. Structural headwinds such as demographics and excessive taxation and regulation will keep German growth “very subdued in the absence of major policy changes,” he said. In the same vein, he described the French numbers as “a flash in the pan”.

Germany is at the heart of the continent’s manufacturing sector, and the effects of its underperformance were visible in figures released by neighboring countries that are closely integrated into its supply chains. Both Hungary and Sweden contracted in the third quarter by 0.7 percent and 0.1 percent, while the Czech economy grew less than expected at just 0.3 percent.

Including non-euro countries, the EU economy as a whole grew by 0.3 percent, unchanged from the second quarter.