Statistics agency Eurostat said Thursday that the economy grew 0.2% in the quarter from the previous three-month period. The countries that share the euro are growing at a slower pace amid uncertainty over when and how Britain will leave the EU and the U.S.-China trade dispute, which have weighed on business confidence. The ECB responded in September by launching a stimulus package of bond purchases and an interest rate cut.
Unemployment remained unchanged in September at 7.5%, the lowest since July 2008, as the labor market continues its slow recovery from the 2010-2012 eurozone debt crisis. But inflation dropped to an annual rate of just 0.7% from 0.8% the month before, underlining the ECB's struggle to lift it toward its target of just under 2%.
"The slightly better-than-expected third-quarter GDP figure for the eurozone does not alter the fact that the region is expanding at only a very modest pace," said Andrew Kenningham, chief Europe economist at Capital Economics. "And forward-looking indicators suggest that it is likely to slow further in the fourth quarter."
The weak outlook is one of the challenges facing Lagarde as she takes office Friday. She inherits a package of stimulus measures including 20 billion euros ($22 billion) a month in purchases of government and corporate bonds by the central bank, a step which pumps newly printed money into the financial system to stimulate more lending, growth and inflation.