The monthly data suggest that consumer spending was behind the slowdown in quarterly euro-zone GDP growth in Q3. But September’s rise in retail sales provided a strong starting point for Q4. And the improving labour market should support spending. Indeed, in September the unemployment rate fell to an eight-year low of 8.9%. Moreover, high consumer confidence suggests that spending growth will accelerate in the months ahead. While we expect higher inflation to cause consumer spending growth to slow in 2018, this all suggests that the slowdown will be modest.
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