EU Productivity Declines for Fifth Month Running in August
The latest productivity data from Markit, covering the EU manufacturing and services economy, signalled an
ongoing reduction in output per worker.
Of the four largest EU economies, Germany and Italy posted further declines in productivity, France registered no change since July while the UK recorded a marginal improvement.
The seasonally adjusted EU Productivity PMI is a single-figure indicator of productivity, derived from Markit’s national manufacturing and services PMI survey data. Readings above 50.0 signal an improvement in
productivity compared with one month previously, and readings below 50.0 a deterioration.
The EU Productivity PMI registered 48.7 in August, little-changed from July’s 48.6. The latest reading signalled a fifth successive monthly deterioration in output per employee, the longest sequence registered for 40 months.
Productivity fell in both manufacturing and services for the fifth consecutive month. The goods-producing sector continued to record the steeper pace of contraction, albeit the weakest since April. The rate of decline in services productivity was unchanged from July.
Eurozone output per head declined for the twelfth time in 13 months in August. The rate of deterioration
was little-changed from July, and weaker than those seen in May and June. Manufacturing and services registered broadly similar rates of decline.
Italy remained the worst-performing ‘big-four’ EU economy in August, registering a thirteenth successive
monthly decline in output per head. Meanwhile, German productivity deteriorated for the fifth month running, while French output per head was unchanged since July. The UK private sector posted a marginal improvement in
productivity, following a flat trend in July.
August data highlighted strengthening productivity trends in only six of the 23 monitored industries. Three
sectors registered broadly stable trends. The four worst-performing sectors all posted steeper declines in productivity than in July. The strongest rate of deterioration was registered in the Luxury Consumer Goods sector. The pace of decline in output per head was the sharpest since the series started in January 1998.
The second-fastest rate of deterioration in productivity was posted in the Telecoms sector, where the rate of decline was the joint-fastest on record. The longest current sequence of productivity decline was posted in the Autos sector, where output per head has fallen for the past 17 months. That said, the rate of deterioration in the latest survey period was the weakest since March.
The strongest rate of productivity growth was registered in the Healthcare sector. Moreover, the rate of growth was the fastest since February 2010. The next-best performing sector in July was Building Materials, where productivity improved for the ninth month running. That said, the rate of expansion in output per head was the slowest in three months.