Euro-area growth and inflation: Euro-area growth tracking holds steady while the end-2026 headline inflation nearcast declines

Overview

This update reviews euro-area activity and inflation data released on September 21–22. Goldman Sachs sees unchanged aggregate growth tracking, with firmer French consumption data offset by softer or moderating signals elsewhere, while lower energy prices reduce its headline inflation nearcast.

Core views

Goldman Sachs kept its euro-area Q3 GDP growth tracking estimate unchanged at +0.20% quarter-on-quarter. Country-level tracking stood at +0.04% in Germany, +0.11% in France, +0.11% in Italy and +0.59% in Spain. The update therefore does not alter the institution's area-wide growth assessment, although the underlying country data were mixed. In France, July data strengthened the growth estimate modestly. Real services turnover rose +0.2% month-on-month, following +0.3% in June, while hospitality sales increased +0.7% after a soft June. Real retail sales rose +0.8% month-on-month, supporting a firm reading for goods-consumption growth, although wholesale sales were softer. On balance, these releases lifted Goldman Sachs' French tracking estimate by 0.04 percentage points on an unrounded basis to +0.11% quarter-on-quarter. Spanish indicators pointed to moderation in July industrial and services revenue, but tourism improved in August. Total overnight stays rose +1.4% year-on-year, versus +0.3% in July, driven by a +2.8% increase in non-resident nights. Domestic activity was weaker, with domestic overnight stays down 1.1%. Elsewhere, the Dutch monthly investment index softened in July; September consumer confidence was unchanged in the Netherlands and slightly softer in Belgium; and Finland's unemployment rate edged down in August. Goldman Sachs notes that the euro-area consumer-confidence flash reading was due later that day. On inflation, Goldman Sachs had recently launched a high-frequency inflation nearcast model and intends to update it in regular euro-area data reports. No major monthly model input was released over the preceding two days, but wholesale energy prices declined. This reduced the institution's end-2026 area-wide headline inflation nearcast by 0.11 percentage points to +3.74% year-on-year. Its end-2026 core inflation nearcast remained unchanged at +2.62% year-on-year, indicating that the revision was tied to energy-price movements rather than a broader change in underlying inflation pressures.

Analysis framework

The report combines country-level high-frequency activity indicators—such as services turnover, retail sales, revenue, tourism, investment, confidence and unemployment—into euro-area GDP tracking estimates. It separately uses a high-frequency inflation nearcast model, updating the headline and core outlook as new model inputs and energy-price movements emerge.

Methodology notes

• Other

  High-frequency GDP tracking estimates

  Goldman Sachs uses incoming national activity data to update its estimates of current-quarter growth for major euro-area economies and the area as a whole.

• Other

  High-frequency inflation nearcast model

  The model tracks prospective headline and core inflation using frequent data inputs; in this update, lower energy prices reduced the headline nearcast while core inflation was unchanged.

Key data

• Euro-area Q3 GDP growth tracking estimate+0.20% qoqUnchanged at the area-wide level.
• Germany Q3 GDP growth tracking+0.04% qoqCurrent Goldman Sachs tracking estimate.
• France Q3 GDP growth tracking+0.11% qoqUp from +0.07% previously; increased 0.04 percentage points on an unrounded basis after the latest data.
• Italy Q3 GDP growth tracking+0.11% qoqCurrent Goldman Sachs tracking estimate.
• Spain Q3 GDP growth tracking+0.59% qoqCurrent Goldman Sachs tracking estimate.
• End-2026 headline inflation nearcast+3.74% yoyDown 0.11 percentage points following a decline in wholesale energy prices.
• End-2026 core inflation nearcast+2.62% yoyUnchanged.
• Spain total overnight stays+1.4% yoy in AugustUp from +0.3% in July; supported by non-resident nights rising +2.8%, while domestic activity fell 1.1%.

Impact & implications

The report's evidence supports an unchanged aggregate euro-area growth view despite mixed national signals. The inflation revision is concentrated in headline inflation through lower energy prices, while the unchanged core nearcast indicates no reported shift in underlying inflation tracking.

What to watch

• The euro-area consumer-confidence flash reading scheduled for later on September 22.
• Future updates to Goldman Sachs' high-frequency inflation nearcast as monthly inputs and energy prices change.