The eurozone economy expanded slightly more than expected in the second quarter, as continued growth in France, Italy and Spain offset yet another disappointing quarter in Germany.

Data released Tuesday by the EU's statistics agency Eurostat showed growth of 0.3 percent in the three months through June, and of 0.6 percent compared to the second quarter of 2023 – both numbers came in 0.1 percentage points above the median forecast in a Reuters survey of analysts.

The stronger-than-expected numbers are a pleasant surprise after recent survey data among the region’s businesses pointed to a slowdown at the start of the third quarter. S&P’s composite purchasing managers index dropped to 50.1 in July from 50.8 in June – remaining just a notch above the 50-point threshold which signals economic contraction.

Among the largest member states, Spain again posted the strongest quarterly growth, with 0.8 percent, followed by France and Italy which expanded by 0.3 percent and 0.2 percent respectively.  

Germany, the eurozone’s largest economy was once again the outlier, contracting 0.1 percent quarter-on-quarter and disappointing hopes that it has finally left stagnation behind. Economists had projected 0.1 percent growth.

The country’s poor performance risks proving a drag on the region’s overall performance in the coming months, analysts said. 

“Looking ahead, the German economy will continue to hover between hope and despair,” said ING economist Carsten Brzeski. “With both the U.S. and the Chinese economies losing momentum, along with new trade tensions, there is very little hope for a strong export-driven recovery.”