Martin Ertl: Solid Q3 GDP released last week for Austria and the total of the Euro Area (Martin Ertl)

Solid Q3 GDP released last week for Austria and the total of the Euro Area.
The conditions in the Austrian labor market keep improving amid the sound business cycle.

The Austrian economy continues a strong growth trajectory. According to the flash estimate from the Austrian Institute of Economic Research (Wifo), real GDP increased by 0.8 % (q/q) in the third quarter after it had expanded by 0.9 % quarterly in H1 2017 (trend business cycle component). In seasonally and working day adjusted terms (Eurostat), the quarterly increase in GDP was 0.6 % in Q3. The recovery is broad based across expenditure components. Both household consumption (0.4 % q/q) and fixed investment (07 %) as well as net exports make the economy grow. Exports and imports rose by 0.8 % each in Q3. In annual terms, GDP expanded by 2.6 % after 2.8 % in the previous quarter.

The conditions in the Austrian labor market continued to improve in October. According to the Public Employment Service Austria (AMS), the total number of unemployed amounted to 315.722 persons (excluding persons in training) and was 7.4 % lower than in the corresponding month last year. The unemployment rate was 7.9 % as per the national methodology and 5.6 % according to Eurostat (seasonally-adjusted). In September, there were 9 countries in the EU recording a lower unemployment rate than Austria. While youth unemployment has been declining, the trends among the elderly unemployed remained a cause of concern (Figure 1).

The number of unemployed persons aged 55-59 rose by 3.1 % and persons of age 60 or above increased by 10.0 % in October. Total gross industry wages increased by 2.9 % on average during the three months until August. Fostered by the solid business cycle, total employment has been expanding (1.8 % y/y in October). Employment in the manufacturing and construction sectors grew by 3.3 % and 0.8 % (y/y) in September (Figure 2).

As widely expected, the business cycle remained solid across the entire Euro Area. As per the first estimate, Eurozone GDP expanded by 0.6 % (q/q) and 2.5 % annually. Among further early Q3 GDP releases were France, Spain and Belgium. Uncertainty from Catalonia’s independence vote and political turmoil has not yet inflicted headline GDP growth. Real GDP rose by 0.8 % (q/q) and 3.1 % (y/y) in Q3 2017 in Spain. In France, the economy grew by 0.5 % quarterly and 2.2 % (y/y) and Belgium’s GDP rose by 0.3 % and 1.7 % yearly. Our GDP tracking estimate (as of 3^rd November), that is based on a dynamic factor model, signals 0.6 % quarterly GDP growth in the final quarter of 2017 (Figure 3).

Authors

Martin Ertl, Franz Zobl

Chief Economist Economist

UNIQA Capital Markets GmbH UNIQA Capital Markets GmbH

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(07.11.2017)