Eurozone GDP Nowcaster

How the nowcast works

The Euro Area nowcaster tracks Eurostat’s quarterly GDP growth (chain-linked volumes, YoY%) — the flash estimate is published ~30 days after each quarter closes. This model bridges the lag using four OLS bridge equations fitted on quarterly data since 2006:

• Activity bridge — S&P Global Euro Area Manufacturing PMI and Composite PMI (3-month moving averages), capturing real-time business-cycle momentum across manufacturing and services.
• External bridge — China M1 money supply YoY and global copper price YoY. China M1 captures Chinese domestic demand, the key driver of Eurozone (especially German) capital-goods exports. Copper is a real-time barometer of global industrial activity and highly correlated with the Eurozone manufacturing cycle.
• Financial bridge — EUR/USD YoY and Euro Stoxx 50 YoY, incorporating real-time financial-market signals.
• Industrial bridge — Germany Manufacturing Production Index YoY (Eurostat, NACE C, seasonally adjusted), used as a high-correlation proxy for Euro Area manufacturing (Germany ≈ 28% of EA manufacturing output; correlation ~0.95 with EA cycle). The Eurostat API does not expose the EA aggregate for this NACE breakdown.

Each bridge is validated with an expanding-window out-of-sample test (train from 2006, evaluate 2010–2025, excluding COVID quarters). Bridges are combined using inverse-RMSE ensemble weights. The current-quarter estimate (red star, plotted at today’s date) uses only months of data available so far — it updates each month as new data arrives. The 90% confidence interval comes from 1,000 residual bootstrap iterations.

Known model blind spots: (1) China data quality — PBOC M1 figures can be revised significantly; the China M1 channel is most useful as a 6-12 month leading indicator. (2) The sovereign debt crisis (2011-2013) introduced structural breaks in peripheral Euro Area countries not fully captured at the aggregate level. (3) OLS bridges cannot predict idiosyncratic country-level fiscal shocks (e.g., German industrial policy, Italian fiscal stress, French pension reforms). COVID quarters (2020 Q2 – 2021 Q2) are excluded from estimation and validation.

Bridge performance (OOS 2010–2025, ex-COVID): Activity: 1.14% OOS RMSE  |  External: 1.43% OOS RMSE  |  Financial: 2.00% OOS RMSE  |  Industrial: 1.21% OOS RMSE. Ensemble weights: Activity: 30%  |  External: 24%  |  Financial: 17%  |  Industrial: 28%. Last updated: 2026-03-05 08:37 UTC.