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Europe – Labour productivity improved

08 April 2011

Output per worker continued to rise across the European Union during March 2011, extending the current period of improvement to twenty-three months. The rate of increase accelerated to the strongest since July last year. This was signalled by the seasonally adjusted European Union (EU) Productivity Purchasing Managers Index (PMI) rising from 53.9 in February to 54.2, published by research firm Markit.

The expansion was again broad-based by nation and industry. Service providers and manufacturers both recorded productivity gains during March. Services companies posted the stronger gains for the third straight month.

Output per head rose across each of the EU's four largest economies for the seventeenth month in a row during March. The strongest overall rise in labour productivity was registered in the French private sector, where output per worker rose at the strongest pace since last July.

Output per worker in Germany rose at the second-sharpest rate of the EU 'big four' during March. Although marked, the latest rise was slower than that seen in the previous survey period. Service providers again recorded the stronger rise.

In contrast to the trends seen elsewhere, productivity gains in Italy were manufacturing-led. Higher output per worker has now been recorded in the Italian private sector since November 2009, the shortest current period of expansion among the 'big four'.

UK-based companies recorded the strongest rise in labour productivity since July last year during March. However, growth remained the weakest of the 'big four'. Both UK manufacturers and service providers recorded an acceleration of productivity growth during the latest survey period.

Broken down by detailed sector, the latest data highlighted broad-based productivity gains across the European Union, with twenty-one of the twenty-three monitored industries posting growth.

The strongest rise was recorded in the Banking sector, where productivity growth accelerated to the steepest since December 2003.

Telecommunications companies also posted a considerable increase in output per head over the month, one that was only fractionally weaker than February's sixteen-month high. Elsewhere, strong gains were posted in Transport, Chemicals and Metals, Mining & Steel.

The Food Manufacturing and Hotels sectors remained at the bottom of the productivity performance table during March, and were the only sectors to see productivity decline. Moreover, the rates of decline accelerated in each case. Meanwhile, mediocre rises were seen in Pharmaceuticals, Healthcare and IT Hardware.

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