Upturn in eurozone productivity gathers pace in August

Labour market efficiency in the eurozone improved further in August, marking a 51-month sequence of growth. The upturn was widespread across the manufacturing and service sectors, with the quicker rise noted among the former. Italian workers saw the fastest increase in productivity (on average) out of the big-three monitored economies, while Germany saw a return to growth.

The seasonally adjusted Eurozone Productivity PMI^" - derived from IHS Markit's national manufacturing and services PMI survey data - was a tick higher than July's four-month low of 51.2 in August. At 51.3, the latest figure was indicative of a slight increase in labour efficiency across the currency union that was below the long-run series average.

IHS Markit Eurozone Productivity PMI^"

The upward movement in the headline figure reflected a stronger expansion in output per head across the manufacturing industry, with growth in the service sector unchanged from July's four-month low. Manufacturing employees posted stronger growth than service workers for the twenty-seventh month running, though in both cases the respective rates of expansion were below their long-run trend levels.

Having decreased in the previous month for the first time since May 2013, productivity in Germany rose in August. The rate of expansion was marginal and broadly in line with the average recorded over the past year. Output per head increased in the manufacturing sector, while a second consecutive decline was evident among service providers.

Italy was the best-performing country regarding overall growth of output per head, with the latest upturn being the fastest in almost six-and-a-half years. Quicker rates of expansion were evident in both the manufacturing (two-month high) and service (ten-and-a-half year peak) sectors.

Labour efficiency in France improved to a greater extent in August, reflecting a stronger increase in the manufacturing economy. The rise in output per worker among goods producers was solid, the quickest since February 2011 and faster than in Italy and Germany. Productivity growth in the French service sector softened to an eight-month low.

Productivity PMI Indices: August 2017

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