The range of first estimates of Q3 GDP growth is quite broad, ranging from a very positive figure in the United States (1.2% q/q) to a return to stagnation in Europe (-0.1% q/q in the euro area and 0% q/q in the United Kingdom), after a temporary acceleration in Q2. At the same time, Japanese growth posted a clear correction (-0.5% q/q) after two very positive quarters.
The economic, inflation and labour market data published in October all point to a cooling, to a greater or lesser extent:
- Business climate surveys had already deteriorated in Europe in Q3 and remained so in October, particularly in manufacturing. In the US or in Japan, these surveys, which had previously showed a more favourable situation, have deteriorated;
- Inflation is slowing significantly, particularly in the United Kingdom and the euro area (especially in Germany and France), with, for the second consecutive month, favourable base effects (monthly inflation significantly lower in October 2023 than in October 2022). These base effects also benefit core inflation, against a backdrop of stabilising prices for manufactured goods (and even decreasing production prices, particularly in Germany). In other areas, inflation is also falling. However, the only slight drop in US core inflation in October bolsters doubts about the extent of the US economy slowdown;
- Job creation slowed in the US. In Europe, France and Germany even posted job destruction in Q3. As a result, the unemployment rate has risen slightly in some countries (US, France), from a historically low level. Furthermore, wage growth is starting to slow in both France and Japan, in line with ongoing disinflation.
In terms of growth prospects, the cooling already observed in Europe and Japan in Q3 should extend to the United States in Q4, where growth should reach 0.4% q/q according to our current forecasts, while the euro area (0% q/q) and the United Kingdom (0.1% q/q) should continue to see very low growth.
