Quarterly national accounts - GDP and employment - Statistics Explained

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Quarterly national accounts - GDP and employment

Data extracted on 19 April 2021.

Planned article update: 19 July 2021.

Highlights

GDP down by 0.7% and employment up by 0.4% in the euro area in the fourth quarter of 2020.

GDP down by 0.5% and employment up by 0.4% in the EU in the fourth quarter of 2020.

GDP and employment growth rates, % change over the previous quarter, based on seasonally adjusted data, 2020Q4

This article presents key messages and data extractions based on Eurostat's updated estimation of quarterly gross domestic product (GDP) and employment for the fourth quarter of 2020 in the European Union (EU) and euro area (EA-19) released on 19 April 2021. 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).

Compared to the previous release on 9 March 2021, growth rates for GDP were not revised while employment in persons were only revised for the euro area for 2020Q4 (+0.3% to +0.4%). Also revisions can be observed for some aggregates. Please note that Greek data have a series break in 2010, following a 2020 benchmark revision and that particular developments of GFCF are often related to the Irish figures and activities of MNEs.

Declines observed for GDP growth rates in main aggregates follow a strong rebound in the third quarter of 2020, which is due to impact of the COVID-19 pandemic. During the whole fourth quarter of 2020 reintroduction of containment measures were taking place in Member States. 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 fourth quarter of 2020.

Analysis on what was the impact of COVID-19 on main GDP aggregates including employment for the first quarter of 2020 is provided in the Statistics Explained article.


Full article


Quarterly GDP growth

GDP down by 0.7 % in the euro area and by 0.5 % in the EU

GDP decreases by 0.7 % in the euro area (EA-19) and 0.5 % in the EU during the fourth quarter of 2020, compared with the previous quarter, according to an estimate (see Data sources below) published by Eurostat. These declines follow a strong rebound in the third quarter of 2020 (+12.5% in the euro area and +11.7% in the EU) and the sharpest decreases since the time series started in 1995 observed in the second quarter of 2020 (-11.6% in the euro area and -11.2% in the EU).

Compared with the same quarter of the previous year, seasonally adjusted GDP decreased by 4.9 % in the euro area and by 4.6 % in the EU in the fourth quarter of 2020, after -4.1 % in the euro area and -4.0 % in the EU in the previous quarter.

During the fourth quarter of 2020, GDP in the United States increased by 1.1 % compared with the previous quarter (after +7.5 % in the third quarter of 2020). Compared with the same quarter of the previous year, GDP decreased by 2.4 % (after -2.8 % in the previous quarter).

Table 1: Growth rates of GDP in volume (based on seasonally adjusted data), 2020Q4 - 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, 2020Q4 - Source: Eurostat (namq_10_gdp) and (naidq_10_gdp) for US data

GDP growth by Member State

Among the Member States, sharpest increases were recorded in Romania (+4.8 %), Malta (+3.8 %), Croatia and Greece both (+2.7 %) in the fourth quarter of 2020, while the highest decreases were observed in Ireland (-5.1 %), Austria (-2.7 %) and Italy (-1.9 %).


Figure 2: GDP growth rates by Member State, % change over the previous quarter, based on seasonally adjusted data, 2020Q4 - Source: Eurostat (namq_10_gdp)

GDP components and contributions to growth

During the fourth quarter of 2020, household final consumption expenditure decreased by 3.3 % in the euro area and by 3.0 % in the EU (after +14.2 % in the euro area and +13.4 % in the EU in the previous quarter). Gross fixed capital formation increased by 1.9 % in the euro area and by 1.6 % in the EU (after +13.8 % and +12.0 % respectively). Exports increased by 4.0 % in both the euro area and in the EU (after +16.7 % in the euro area and +17.1% in the EU). Imports increased by 4.5 % in the euro area and by 4.3 % in the EU (after +11.8 % and +12.7 %).

Household final consumption expenditure had a negative contribution to GDP growth in both the euro area and the EU (-1.8 and -1.6 percentage points – pp, respectively). The contribution of gross fixed capital formation was +0.4 pp in the euro area and +0.3 pp in the EU. Changes in inventories had a positive contribution to GDP growth in the euro area and the EU (+0.6 pp both), while the contribution of the external balance was negligible.

Figure 3: Decomposition of GDP growth by expenditure aggregates, contributions to growth (over the previous quarter) in percentage points, 2020Q4 - Source: Eurostat (namq_10_gdp)

Quarterly employment growth

Number of persons up by 0.4 % in both the euro area and in the EU

The number of persons employed increased by 0.4 % in both the euro area and in the EU in the fourth quarter of 2020 compared with the previous quarter. In the third quarter of 2020, employment increased by 1.0 % in the euro area and by 0.9 % in the EU. However, very different picture is visible for hours worked, which decreased by 1.6 % in the euro area and by 1.3 % in the EU in the fourth quarter of 2020 (after increase by 14.4 % and 11.5 % respectively in the third quarter of 2020).

Compared with the same quarter of the previous year, employment based on persons decreased by 1.9 % in the euro area and by 1.6 % in the EU in the fourth quarter of 2020 (after -2.1 % in the euro area and -2.0 % in the EU in the third quarter of 2020). Number of hours worked decreased by 5.6 % in the euro area and by 4.6 % in the EU in the fourth quarter of 2020 (after -4.5 % and -3.7 % in the third quarter of 2020).

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), 2020Q4 - Source: Eurostat (namq_10_a10_e)


Table 3: Growth rates of employment in hours worked (¹), 2020Q4 - 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, 2020Q4 - Source: Eurostat (namq_10_a10_e)

Employment growth by Member State

Among EU Member States, Czechia, Croatia, Latvia and Malta (all -0.5 %), recorded the highest declines in employment in persons in the fourth quarter of 2020 compared with the previous quarter. Sharpest increases were observed in Estonia and Portugal (both +1.9 %), as well as in Spain (+1.2 %).

The impact on employment in hours worked is generally much more pronounced in 2020Q4 during COVID-19 pandemic. Ireland (+3.7 %), Portugal (+2.3 %) and Romania (+1.3 %) experienced highest increases among Member States, while highest decreases were recorded in Slovenia (-12.4 %), Czechia (-6.3 %) and Austria (-5.8 %).

Figure 5: Employment growth rates % change over the previous quarter, based on seasonally adjusted data, 2020Q4 - Source: Eurostat (namq_10_a10_e)

Employment levels

Employment in persons increased by 0.6 million in the euro area and by 0.8 million in the EU

Based on seasonally adjusted figures, Eurostat estimates that in the fourth quarter of 2020, 206.0 million people were employed in the EU, of whom 158.0 million were in the euro area. In relation to the COVID-19 pandemic, employment in persons decreased by 3.1 million in the euro area (-1.9%) and by 3.4 million (-1.6%) in the EU below the level of the fourth quarter of 2019. While before, the fourth quarter of 2019, recorded the highest levels in employment since the beginning of the series in 1995.

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.


Figure 6: Evolution of employment in persons and hours worked, index 2015=100, based on seasonally adjusted data, 2020Q04 - 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 based on persons in the first and second quarter of 2020 as GDP dropped sharply while the impact on employment in persons was still relatively moderate. In the third and fourth quarter of 2020, productivity based on persons recovered from the previous sharp drop, but remained negative compared to the same quarter of the previous year. Slight decrease in productivity in persons was recorded in fourth quarter of 2020, compared to the same quarter of the previous year with -3.0% for the euro area and -3.1% for the EU.

Based on hours worked, productivity compared to the same quarter of the previous year increased by 1.7% for the euro area and to 0.7% for the EU.


Figure 7: Labour productivity growth rates, % change over the same quarter of the previous year, based on seasonally adjusted data, 2020Q4 - 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 first quarter of 2021 will be released on 30 April 2021 and will be updated on 18 May 2021. The next regular estimates of European aggregates are due on 8 June 2021 (for both GDP and employment estimates). Revision triangles for GDP for the Euro area and the EU can be found here. These revision triangles are updated once per quarter.

Please note that most EU countries carried out benchmark revisions in 2019 which were mainly introduced in September-October. While the remaining countries (except Luxembourg) conducted their benchmark revisions in August-October of 2020. A smaller group of countries had already carried out their benchmark revisions in the earlier years (between 2016 and 2018).

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

Excel.jpg Detailed tables of GDP and Employment estimate 2020Q4

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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