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Eurozone productivity falls further

Christian Fernsby |
As has been the case since mid-2018, aggregate eurozone productivity decreased during August.

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The fall was centred on the manufacturing industry, however, with stabilisation evident in the service economy.

Efficiency losses were noted in the private sectors of Germany and Italy, with growth registered in France for the first time since September 2018.

At 49.6 in August, the seasonally adjusted Eurozone Productivity PMI signalled a deterioration in labour performance for the fourteenth month in a row.

However, rising from 49.3 in July, the latest reading was indicative of a marginal pace of contraction.

Manufacturing was the key source of weakness, where the current sequence of falling productivity was stretched to one-and-a-half years.

The contraction was broad-based across France, Germany and Italy.

German goods producers recorded the fastest deterioration in labour performance of the three countries for which data are published, despite the rate of contraction easing to the slowest in nearly a year.

August data pointed to marked reductions in both manufacturing production and jobs.

The slowest drop was noted at French manufacturers, with the pace of contraction matching that seen in July and therefore being the joint-slowest in the current ten-month sequence of reduction.

In Italy, manufacturing workforce efficiency worsened marginally, but that compared with renewed during July.

Productivity has fallen in 15 of the past 16 months.

Production and employment decreased in August.

Eurozone service sector productivity stabilised in August, ending a four-month sequence of contraction.

This mainly reflected the strongest improvement in labour efficiency in France since May 2018.

French PMI data showed solid increases in services business activity and employment, with the stronger rate of expansion in the former.

Italian service sector productivity contracted at a sharper rate than in Germany, with its pace of reduction broadly similar to July’s six-year high.

Both output and employment rose, with growth stronger for the latter.

The rate of contraction in German services productivity accelerated in August, though remained marginal.

In contrast to the trend for manufacturing, there were widespread increases in services activity and jobs.

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