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Economy in Brief

German Employment Grows in Q2 -- and So Does Productivity
by Carol Stone August 17, 2006

The German Federal Statistics Office today published the employment data that are inputs to the national accounts. So we can compare changes in GDP to changes in employment, yielding a rough measure of productivity in the German economy.

As reported Monday, GDP expanded 0.9% in Q2, an annual rate of 3.6%. Total domestic employment in Germany rose 1.1%, annualized, producing a gain in GDP/employee of 2.5%; this followed 3.0% in Q1. Thus, the first half-year saw this proxy for productivity increase at a 2.77% annual rate, which is the strongest two quarters since early 1998, eight years ago.

Employment is now also available by industry for Q2, and as seen in the table below, it continues to decline in the goods-producing sectors. This has been almost continuous since the combined data for East and West Germany begin in 1991. During that time, "industry" has declined from 30% of employment to right at 20% in Q1 and Q2 this year. To give this some context, in the US, the goods-producing sector (which also includes construction) has declined from 21% of nonfarm payrolls in early 1991 to 16.6% in the first half of 2006.

Among individual German industries, finance and other business services have shown the greatest growth, with Q2 up 2.7% from a year ago, while total employment gained just 0.5%. The second ranking growth has been in government, health and other community services, which are up 0.9% in Q2 over Q2 2005.

Germany
Millions, Seas Adj
Q2 2006 Q1 2006 Q4 2005 Year Ago 2005 2004 2003
Total Domestic Employment 38.96 38.85 38.88 38.77 38.82 38.85 38.72
Manufacturing 7.42 7.43 7.46 7.52 7.51 7.63 7.75
Construction 2.12 2.13 2.15 2.17 2.16 2.25 2.32
Trade, Hotels, Transportation, Etc. 9.80 9.75 9.77 9.75 9.76 9.80 9.72
Finance, Business Services 6.55 6.49 6.46 6.37 6.40 6.30 6.13
Gov't, Community Services 11.85 11.83 11.81 11.74 11.76 11.63 11.54
GDP Growth (%, SWDAAR) 3.6 2.7 1.1 2.4 1.1 0.8 -0.2
Employment Growth (%, SWDAAR) 1.1 -0.3 0.6 0.5 -0.1 0.4 -0.9
GDP/Employee (%, SWDAAR) 2.5 3.0 0.5 1.9 1.2 0.4 0.8
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