Euro zone productiveness development stays weak in Q3, information exhibits

FRANKFURT (Reuters) – Euro zone productiveness development remained weak within the third quarter regardless of a modest enlargement within the bloc’s financial system, persevering with a poor run that has lasted years, information from Eurostat confirmed on Friday.

Per capita productiveness was unchanged in comparison with the identical quarter a 12 months earlier whereas it expanded by 0.5% primarily based on hours labored, or at about half the speed of total financial development, Eurostat mentioned.

Productiveness development has been particularly weak because the pandemic and a big hole has opened between Europe and the U.S., pushed by a number of things that would persist.

Europe is scuffling with an extreme reliance on costly, imported vitality, inefficient labour markets, fragmented regulation and reliance on exports in a interval of deglobalisation.

The euro zone’s financial system expanded by 0.4% on the quarter, unchanged from a earlier estimate, whereas employment was up 0.2%, additionally according to a preliminary determine.

However there’s little to recommend a sustainable restoration with business nonetheless in recession, exports weak, investments muted and households persevering with to maintain consumption down and opting to save lots of their money as a substitute.

Nonetheless, there seems to be a modest enchancment in productiveness, which reached its lowest stage a 12 months in the past and has now turned optimistic, no less than primarily based on hours labored.

A key challenge for the ECB is that poor productiveness development places upward stress on costs and makes it more durable for the European Central Financial institution to steer value development again to its 2% goal.