The US economy grew “strongly” in the third quarter while GDP growth in the euro area contracted, and corporate results tell a similar story, according to a European private bank.
In an economic update, economists at Societe Generale described growth as healthy in the US, but “sluggish” in Europe.
Real GDP increased at an annual rate of 4.9 per cent in the third quarter, according to an advance estimate from the US Bureau of Economic Analysis.
Meanwhile in the euro area and EU, seasonally adjusted GDP increased by 0.1 per cent year-on-year in Q3. This follows year-on-year increases of 0.5 per cent and 0.4 per cent in the euro area and EU respectively in the previous quarter.
Economists at the private bank, who said their equity positioning was “globally neutral with a preference for US markets”, likewise called the earning season “generally disappointing” in Europe, but positive in the US.
An earnings insight report from FactSet notes that for Q3, with 92 per cent of S&P 500 companies reporting actual results, four in five companies (81 per cent) have reported a positive earnings per share surprise, and three in five (61 per cent) a positive revenue surprise.
Outlook for the European economy
In an economic forecast, the European Commission described a modest recovery ahead after a challenging year.
“The European economy has lost momentum this year against the background of a high cost of living, weak external demand and monetary tightening,” the forecast read.
“While economic activity is expected to gradually recover going forward, the European Commission’s autumn forecast revises EU GDP growth down compared to its summer projections.
“Inflation is estimated to have dropped to a two-year low in the euro area in October and is set to continue declining over the forecast horizon.”
Chloe Cheung is a senior features writer at FT Adviser
