EU Productivity Declines for 4th Month Running in July
The latest productivity data from Markit, covering the EU manufacturing and services economy, signalled an ongoing reduction in output per worker.
The UK joined the Eurozone in registering declining productivity, although only a fractional deterioration was reported. The rate of decline in French output per head eased to a marginal pace, while Italy remained the worst performer among the four-largest EU economies.
The seasonally adjusted EU Productivity PMI® registered 48.6 in July, up from June’s 48.3. The latest reading signalled a fourth successive monthly deterioration in output per employee, albeit at a weaker rate than the 39-month record posted in June.
Productivity fell in both manufacturing and services for the fourth consecutive month. The goods-producing sector continued to record the steeper pace of contraction. In both sectors, the rates of deterioration were weaker than in June.
Eurozone output per head declined for the eleventh time in 12 months in July. That said, the rate of contraction eased to the weakest since April. Both manufacturing and services registered the weakest falls for three months.
All three of the largest Eurozone economies registered falling output per head in July. Italy recorded the steepest drop, and France the slowest. Germany bucked the broad easing trend, registering the fastest drop in productivity in 2012 so far. The UK registered the first drop in output per head since January 2009, driven by a series-record fall in manufacturing productivity.
July data highlighted strengthening productivity trends in only eight of the 23 monitored industries. Ten sectors registered weaker or stable rates of contraction. The strongest rate of deterioration was registered in the Chemicals sector. The pace of decline in output per head was the sharpest since December 2008, and the fourth-fastest in the series history.
The second-fastest rate of deterioration in productivity was posted in the Autos sector, where the rate of decline was unchanged from June’s record.
The longest current sequence of productivity decline was posted in the Healthcare sector, where output per head has fallen for the past 14 months. That said, the rate of deterioration in the latest period was only marginal.
The strongest rate of productivity growth was registered in the Building Materials sector. Moreover, the rate of growth was the fastest since September 2010. The next-best performing sector in July was Paper & Forest Products, where the rate of growth accelerated to a 17-month high. The remaining sectors that saw improved productivity trends posted only modest or marginal rates of expansion.