EUROZONE DATA: Sluggish Productivity Trend Persists In Q4
Eurozone real productivity per employee fell 0.1% Q/Q in Q4, ending a streak of three consecutive positive readings. On an annual basis, productivity rose 0.2% Y/Y, up from 0.0% in Q3 and the highest since December 2022. However, this was still below the ECB’s December MPR projection of 0.5%.
- A cyclical recovery in productivity growth is key to the ECB’s projection for a rebound in economic activity. Although the declining trend in productivity growth appears to have been arrested over the past few quarters, evidence of a upswing is still lacking.
- Meanwhile, employment growth is also displaying early signs of levelling off, printing at 0.1% Q/Q in Q4 (in line with the ECB’s projection but below last quarter’s 0.2%). Annual employment growth was 0.6% Y/Y (vs 1.0% prior).
- At a country level, sequential productivity growth fell across the four major Eurozone economies, most notably in Germany and Spain (-0.2% Q/Q). On an annual basis, productivity growth rose 1.4% Y/Y in Spain and 0.3% in France, but fell 0.1% in Germany and 0.7% in Italy.
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GERMAN DATA: GDP Fell for Second Consecutive Year in 2024
German GDP fell 0.1% Q/Q in Q4 2024 according to Destatis' preliminary estimate. That follows Q3's +0.1%, and brings total 2024 GDP growth to -0.2% Y/Y on a non-adjusted basis (in line with consensus, following -0.3% in 2023) and calendar-adjusted basis (-0.1% 2023).
- As drivers behind the full-year contraction, Destatis cited "increasing competition for the German export industry in important sales markets, high energy costs, persistently high interest rates, but also an uncertain economic outlook".
- Across gross value added by sector, manufacturing and construction stand out negatively at -3.0% and -3.8% Y/Y, respectively. Services was overall positive at +0.8%, underpinned by the "public services, healthcare, education" category at +1.6%.
- Productivity was weak, with GDP per employee at -0.4% Y/Y (-1.0% 2023), and GDP per hour worked at -0.1% Y/Y (-0.6% 2023).
- Final data containing more detail are to be released in the coming weeks.
- For 2025, MNI's collation of sellside analysts stands at a median of +0.3% Y/Y - having been downwardly revised by 0.2pp during the last three months.
