trend in labour cost indicators observed in recent years does not continue. with regard to the latter, there seems to be notable inertia, despite the subdued economic expansion ; therefore, vigilance is warranted. regarding fiscal policies in the euro area, may i expressly refer you to the governing council's statement of thursday, 24 october on the stability and growth pact. there is a strong consensus within the governing council that the principle of budgetary discipline enshrined in the treaty and the stability and growth pact are indispensable for economic and monetary union and that the stability and growth pact has been successful in promoting sound public finances and fiscal convergence, as well as in supporting the return to price stability. moreover, the pact is in the interest of the member states. may i also again urge governments to implement decisively the structural reform agenda, both within the area of fiscal expenditures and revenues and in labour and product markets. such action is needed to enhance potential output growth over the medium term. at the same time, the prompt implementation of structural reforms would contribute towards strengthening confidence in the euro area and thereby support economic growth in the short term. we are now at your disposal for questions.

- term aim. at the same time, in the light of the continued subdued inflation outlook, monetary policy has to remain highly accommodative for a prolonged period of time to support underlying inflation pressures and headline inflation developments over the medium term. we will, therefore, closely monitor inflation developments and the impact of the unfolding monetary policy measures on the economy. our forward guidance will ensure that financial conditions adjust in accordance with changes to the inflation outlook. in any case, the governing council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry. let me now explain our assessment in greater detail, starting with the economic analysis. euro area real gdp increased by 0. 3 %, quarter on quarter, in the third quarter of 2019, following growth of 0. 2 % in the second quarter. this pattern of moderate growth reflects the ongoing 1 / 3 bis central bankers'speeches weakness of international trade in an environment of continued global uncertainties, which has particularly affected the euro area manufacturing sector and has also dampened investment growth. at the same time, the services and construction sectors remain more resilient, despite some moderation in the latter half of 2019. incoming economic data and survey information point to some stabilisation in euro area growth dynamics, with near - term growth expected to be similar to rates observed in previous quarters. looking ahead, the euro area expansion will continue to be supported by favourable financing conditions, further employment gains in conjunction with rising wages, the mildly expansionary euro area fiscal stance and the ongoing – albeit somewhat slower – growth in global activity. the risks surrounding the euro area growth outlook, related to geopolitical factors, rising protectionism and vulnerabilities in emerging markets, remain tilted to the downside, but have become less pronounced as some of the uncertainty surrounding international trade is receding. euro area annual hicp inflation increased to 1. 3 % in december 2019, from 1. 0 % in november, reflecting mainly higher energy price inflation. on the basis of current futures prices for oil, headline inflation is likely to hover around current levels in the coming months. while indicators of inflation expectations remain at low levels, recently they have either stabilised or ticked up slightly. measures of underlying inflation have remained generally muted, although there are further indications of a moderate increase in line with previous expectations. while labour cost pressures have strengthened amid tighter labour markets