Europe's productivity growth at 14-month low

7 October 2010

7 October 2010 | Angeline Albert   

Growth in labour productivity across Europe has reached a 14-month low, according to the latest EU Purchasing Managers’ Index (PMI).

A rise in output per employee across the EU in September effectively extended the period of growth to 17 months but the overall pace of expansion has slowed.

The overall EU Productivity PMI, which covers manufacturing and services, weakened from 54.3 in August to 53.5 in September.

Out of the EU’s four largest economies – Germany, France, the UK and Italy – only the latter recorded an acceleration in productivity last month.

France registered the strongest overall increase, for the 17th consecutive month.

Productivity growth in Germany was maintained in September for the 15th month but growth was the weakest since August 2009.

UK-based firms registered the weakest rise in output per employee. The rise in growth in September was at its slowest pace since February 2009.

Andrew Self, an economist at Markit, which produces the PMI reports, said: “We’ve seen the growth peak from the economic recovery but employment is still catching up. This is a confidence issue for employers.

“Order books are slowing a bit, which is having an effect on manufacturing and is then having a knock-on effect. Manufacturing has led the recovery in terms of output.

“Whether order books are slowing as a result of austerity measures by governments in the EU is hard to say.”

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