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%).
Employment picks up pace, industrial production grows
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.
Market reaction mixed
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.
