Quarterly national accounts - GDP and employment

Data extracted on 20 July 2020.

Planned article update: 19 October 2020.

Highlights

GDP down by 3.6% and employment down by 0.2% in the euro area in the first quarter of 2020.

GDP down by 3.2% and employment down by 0.1% in the EU-27 in the first quarter of 2020.

GDP and employment growth rates, % change over the previous quarter, based on seasonally adjusted data, 2020Q1

This article presents key messages and data extractions based on Eurostat's updated estimation of quarterly gross domestic product (GDP) and employment for the first quarter of 2020 in the European Union (EU-27) and euro area (EA-19) released on 20 July 2020. This completes a sequence of quarterly estimates of European main national accounts aggregates (including employment) that are based on available country data (see previous news releases).

While growth rates for GDP and employment in persons were not revised (except EU-27 growth compared to the same quarter of the previous year from -2.6% to now -2.5%), revisions of some aggregates can mainly related to a benchmark revision introduced in Czech national accounts and the update of annual and quarterly Irish figures, which particularly explain revisions of gross fixed capital formation and imports.

Sharp drops of growth rates in many aggregates are due to the impact of the COVID-19 pandemic, since containment measures began to be widely introduced by Member States in March 2020, the final month of the period covered. Eurostat has published a note on the impact of the COVID-19 outbreak on national accounts. In addition to this, guidance on quarterly national accounts (including flash) estimates in the context of the COVID-19 crisis was provided, as well as country specific metadata on the impact of COVID-19 on GDP estimates for the first quarter of 2020.


Full article


Quarterly GDP growth

GDP down by 3.6 % in the euro area and by 3.2 % in the EU-27

GDP decreased by 3.6 % in the euro area (EA-19) and 3.2 % in the EU-27 during the first quarter of 2020, compared with the previous quarter, according to an estimate (see Data sources below) published by Eurostat. These were the sharpest declines observed since time series started in 1995. In March 2020, the final month of the period covered, COVID-19 containment measures began to be widely introduced by Member States. In the fourth quarter of 2019, GDP growth was negligible in the euro area and +0.1% in the EU-27.

Compared with the same quarter of the previous year, seasonally adjusted GDP decreased by 3.1 % in the euro area and by 2.5 % in the EU-27 in the first quarter of 2020, after +1.0 % in the euro area and +1.2 % in the EU-27 in the previous quarter. These were the sharpest declines since the third quarter of 2009 (-4.5% for euro area and -4.4% for EU).

During the first quarter of 2020, GDP in the United States decreased by 1.3 % compared with the previous quarter (after +0.5 % in the fourth quarter of 2019). Compared with the same quarter of the previous year, GDP rose by 0.3 % (after +2.3 % in the previous quarter).

Table 1: Growth rates of GDP in volume (based on seasonally adjusted data), 2020Q1 - Source: Eurostat (namq_10_gdp) and (naidq_10_gdp) for US, JP data


Figure 1: GDP growth rates, % change over the previous quarter, based on seasonally adjusted data, 2020Q1 - Source: Eurostat (namq_10_gdp) and (naidq_10_gdp) for US data

GDP growth by Member State

Among the Member States, highest growth rates were recorded in Ireland (+1.2 %), Romania and Bulgaria (both +0.3 %) in the first quarter of 2020, while the largest decreases were observed in France and Italy (both -5.3 %), as well as Spain and Slovakia (both -5.2 %).


Figure 2: GDP growth rates in the first quarter of 2020, % change over the previous quarter, based on seasonally adjusted data - Source: Eurostat (namq_10_gdp)

GDP components and contributions to growth

During the first quarter of 2020, household final consumption expenditure decreased by 4.6 % in the euro area and by 4.2 % in the EU-27 (after +0.1 % in the euro area and +0.3 % in the EU in the previous quarter). Gross fixed capital formation decreased by 1.8 % in both the euro area and in the EU-27 (after +3.3 % and +2.9 % respectively). Exports decreased by 4.1 % in the euro area and by 3.4 % the EU-27 (after +0.1 % in the euro area and being negligible in the EU-27). Imports decreased by 3.6 % in the euro area and by 3.1 % in the EU-27 (after +2.4 % and +1.9 %).

Household final consumption expenditure had a strong negative contribution to GDP growth in both the euro area and the EU-27 (-2.4 and -2.2 percentage points – pp, respectively). The contribution of gross fixed capital formation was -0.4 pp in both the euro area and the EU-27. Changes in inventories had a negative contribution to GDP growth in both the euro area and the EU-27 (-0.3 and -0.2 pp respectively), and the contribution of the external balance was also negative in both the euro area and in the EU-27 (-0.4 pp and -0.2 pp respectively).

Figure 3: Decomposition of GDP growth by expenditure aggregates, contributions to growth (over the previous quarter) in percentage points, 2020Q1 - Source: Eurostat (namq_10_gdp)

Quarterly employment growth

Number of persons down by 0.2 % in the euro area and in by 0.1 % the EU-27

The number of persons employed decreased by 0.2 % in the euro area and by 0.1 % in the EU-27 in the first quarter of 2020 compared with the previous quarter. In the fourth quarter of 2019, employment increased by 0.3 % in the euro area and by 0.2 % in the EU-27. However, very different picture is visible for hours worked, which decreased by 3.7 % in the euro area and by 2.8 % in the EU-27 in the first quarter of 2020 (after increase by 0.1 % and negligible growth rate respectively in the fourth quarter of 2019).

Compared with the same quarter of the previous year, employment based on persons increased by 0.4 % in both the euro area and the EU-27 in the first quarter of 2020 (after +1.1 % and +1.0 % respectively in the fourth quarter of 2019). However, the number of hours worked decreased by 3.4 % in the euro area and by 2.4 % in the EU-27 in the first quarter of 2020 (after increase by 0.9 % and 0.8 % in the fourth quarter of 2019).

These data on employment provide a picture of labour input consistent with the output and income measure of national accounts.

Table 2: Growth rates of employment in persons (¹), 2020Q1 - Source: Eurostat (namq_10_a10_e)


Table 3: Growth rates of employment in hours worked (¹), 2020Q1 - Source: Eurostat (namq_10_a10_e)


Figure 4: Growth of employment in persons and hours worked, % change over the previous quarter, based on seasonally adjusted data, 2020Q1 - Source: Eurostat (namq_10_a10_e)

Employment growth by Member State

Among EU Member States, Lithuania (+1.6 %), Malta (+1.3 %) and Croatia (+1.0 %), recorded the highest growth rates in employment in persons in the first quarter of 2020 compared with the previous quarter. Highest decreases were observed in Spain (-1.0 %), Bulgaria (-0.9 %), and Portugal, Sweden, Slovakia (all -0.5 %).

The impact on employment in hours worked is generally much more pronounced due to COVID-19 pandemic. Italy (-7.5 %), Greece (-5.4 %) and Spain (-5.0 %) experienced highest decreases among Member States, while some positive growth was recorded in IE (+1.0 %), Croatia (+0.7 %) and Poland (+0.5 %).

Figure 5: Employment growth rates, % change over the previous quarter, based on seasonally adjusted data, 2020Q1 - Source: Eurostat (namq_10_a10_e)

Employment levels

Employment in persons decreased by 0.3 million in the euro area and by 0.2 million in the EU-27

Based on seasonally adjusted figures, Eurostat estimates that in the first quarter of 2020, 209.1 million people were employed in the EU-27, of whom 160.4 million were in the euro area. In relation to the COVID-19 pandemic, employment in persons decreased by 0.3 million in the euro area and by 0.2 million in the EU compared with the fourth quarter of 2019, which previously recorded the highest levels of employment ever in both euro area and in the EU-27.

While the effect of the COVID-19 pandemic on employment in persons was mitigated by government support schemes, the impact on hours worked is generally much more pronounced. The number of hours worked decreased by 3.7% in the euro area and by 2.8% in the EU in the first quarter of 2020, compared to the previous quarter.


Figure 6: Evolution of employment in persons and hours worked, Index 2015=100, based on seasonally adjusted data, 2020Q1 - Source: Eurostat (namq_10_a10_e)

Labour productivity

The combination of GDP and employment data allows an estimation of labour productivity. The analysis of growth compared to the same quarter of the previous year shows that productivity growth (based on employed persons) fluctuated around 1.0 % for both zones between 2013 and 2018. In relation to the COVID-19 pandemic, there was a sharp decline in productivity in the first quarter of 2020 as GDP dropped sharply while the impact on employment in persons was still limited. Trends observed for productivity measures based on hours worked are without sharp changes compared to previous quarters due to fact that there were sharp drops in both employment in hours worked and GDP.

Figure 7: Labour productivity growth rates, % change over the same quarter of the previous year, based on seasonally adjusted data, 2020Q1 - Source: Eurostat (namq_10_lp_ulc)

Data sources

Eurostat collects GDP and employment data in the framework of ESA 2010. See here for more details. Additional information on the dissemination of ESA 2010 data is available under latest news on the dedicated website and in the database section National accounts (ESA 2010) (na10)

European aggregates are revised at specific release dates. The preliminary flash estimate of GDP growth of the second quarter of 2020 will be released on 31 July 2020 and will be updated on 14 August 2020. The next regular estimates of European aggregates are due on 8 June 2020 (for both GDP and employment estimates).

Please note that most EU countries carried out benchmark revisions in 2019 which were mostly introduced in September-October. Other countries are planning to conduct their benchmark revisions in September-October of 2020.

For further details see the Eurostat website. Analysis explaining on how coordinated benchmark revisions has changed the annual main GDP aggregates was provided in an article in the end of October 2019.

Source data for tables and graphs

Context

Quarterly figures on the evolution of gross domestic product (GDP) and its main aggregates are among the most significant indicators of the state of any economy, be it at a national or European level, and are of key interest to users. Typical users of quarterly national accounts (QNA) figures are market analysts, forecasters or economic and monetary policy advisors interested in assessing the state of the current business cycle.

The ESA 2010 distinguishes between two employment concepts depending on geographical coverage: resident persons in employment (i.e. the national scope of employment) and employment in resident production units irrespective of the place of residence of the employed person (i.e. domestic scope). The ESA 2010 recognises several employment measures: persons, hours worked and jobs. Eurostat publishes mainly employment data measured in persons and in hours worked.

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