The FINANCIAL — In the EU, GDP up by 11.5% and employment up by 0.9%. In the third quarter of 2020, seasonally adjusted GDP increased by 12.5% in the euro area and by 11.5% in the EU compared with the previous quarter, according to an estimate published by Eurostat, the statistical office of the European Union.
These were by far the sharpest increases observed since time series started in 1995, and a rebound compared with the second quarter of 2020, when GDP had decreased by 11.7% in the euro area and by 11.3% in the EU.
Compared with the same quarter of the previous year, seasonally adjusted GDP decreased by 4.3% in the euro area and by 4.2% in the EU in the third quarter of 2020, which represents a partial recovery after -14.7% and -13.9% respectively in the previous quarter.
During the third quarter of 2020, GDP in the United States increased by 7.4% compared with the previous quarter (after -9.0% in the second quarter of 2020). Compared with the same quarter of the previous year, GDP decreased by 2.9% (after -9.0% in the previous quarter).
GDP growth by Member State
France (+18.7%), Spain (+16.7%) and Italy (+15.9%) recorded the sharpest increases of GDP compared to the previous quarter. These countries were also among the highest decreases in the second quarter. Greece (+2.3%), Estonia and Finland (both +3.3%) and Lithuania (+3.8%) had the lowest increases of GDP. Except for Greece, which registered a decrease of 14.1%, these other countries also had less pronounced declines during the second quarter.
GDP components and contributions to growth
During the third quarter of 2020, household final consumption expenditure increased by 14.0% in the euro area and by 13.2% in the EU (after -12.4% in the euro area and -12.0% in the EU in the previous quarter). Gross fixed capital formation increased by 13.4% in the euro area and by 11.7% in the EU (after -16.0% and -14.3% respectively). Exports increased by 17.1% in the euro area and by 17.2% the EU (after -18.9% in both zones). Imports increased by 12.3% in the euro area and by 12.9% in the EU (after -18.2% and -18.0% respectively).
Household final consumption expenditure had a very strong positive contribution to GDP growth in both the euro area and the EU (+7.3 and +6.9 percentage points – pp, respectively) and the contribution from gross fixed capital formation was also positive in both zones (+2.8 and +2.5 pp respectively). The contributions from the external balance and government final expenditure were positive in both zones, while the contribution of changes in inventories was slightly negative in the both zones.
GDP levels in the euro area and EU
Based on seasonally adjusted figures, GDP volumes recovered significantly in the third quarter of 2020 compared to the previous quarter. They are however still 4.4% below the level at the end of last year for the euro area and EU, slightly above the levels of first quarter 2017. For the United States, GDP was 3.5% below the level of the fourth quarter of 2019, which is the lowest level since the first quarter of 2018.
Employment growth in the euro area and EU
The number of employed persons increased by 1.0% in the euro area and by 0.9% in the EU in the third quarter of 2020, compared with the previous quarter. These were the strongest increases observed since time series started in 1995. In the second quarter of 2020, employment had decreased by 3.0% in the euro area and by 2.8% in the EU.
Compared with the same quarter of the previous year, employment decreased by 2.3% in the euro area and by 2.0% in the EU in the third quarter of 2020, after -3.1% and -2.9% respectively in the second quarter of 2020.
While the impact of the COVID-19 pandemic on employment in persons was mitigated by government support schemes, the changes in hours worked were much more pronounced. Hours worked increased by 14.8% in the euro area and by 11.9% in the EU in the third quarter of 2020, compared with the previous quarter. Compared with the same quarter of the previous year the declines were 4.5% in the euro area and 3.7% in the EU respectively (see annex table on employment in hours worked).
These data provide a picture of labour input consistent with the output and income measure of national accounts.
Employment growth in Member States
In the third quarter of 2020, Ireland (+3.3%), Spain (+3.1%) and Austria (+3.0%) recorded the highest growth compared with the previous quarter. The largest decreases were observed in Lithuania (-1.9%), Romania (-1.0%), and Bulgaria (-0.5%).
The decrease in hours worked was generally much more pronounced for all Member States (see annex table on employment in hours worked).
Employment levels in the euro area and EU
Based on seasonally adjusted figures, Eurostat estimates that in the third quarter of 2020, 205.2 million people were employed in the EU, of which 157.4 million were in the euro area.
In relation to the COVID-19 pandemic, employment in persons is 3.6 million in the euro area (-2.2%) and 4.3 million (-2.1%) in the EU below the level of the fourth quarter of 2019 .
Compared to the fourth quarter of 2019, the number of hours worked was 4.6% lower in the euro area and 3.6% lower in the EU.
Evolution of labour productivity in the euro area and EU
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% for both zones between 2013 and 2018. In relation to the COVID-19 pandemic, productivity based on persons recovered from the previous sharp drop in the third quarter 2020, but remained negative compared to the same quarter of the previous year with -2.2% for the euro area and -2.3% for the EU.
Based on hours worked the impact on productivity was more limited. In the euro area there was a slight increase in productivity based on hours worked compared to the same quarter of the previous year of 0.4%, while for the EU productivity declined slightly by 0.5%.
The euro area (EA19) includes Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania,
Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.
The European Union (EU27) includes Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland and Sweden.
Methods and definitions
European quarterly national accounts are compiled in accordance with the European System of Accounts 2010 (ESA 2010). They include key policy indicators on GDP and employment.
Gross domestic product (GDP) at market prices measures the production activity of resident producer units. Growth rates are based on chain-linked volumes.
Employment covers employees and self-employed working in resident production units (domestic concept). Employment flash estimates are limited to total employment in persons, but regular estimates also cover hours worked and industry breakdowns.
Labour productivity is compiled as the ratio of economic output (GDP, chain-linked volumes with reference year 2010) to labour input (total employment measured in persons or hours worked, for all industries, according to the domestic concept).
Release schedule of main aggregates
This news release presents estimates for euro area and EU GDP and employment aggregates based on countries’ regular national accounts transmission due after t+2 months. Since all derogations expire in 2020, GDP and employment estimates in this news release are based on an almost complete set of Member States data.
A further estimation is done at around t+110 days after some countries transmit updated estimates. To increase the timeliness of key indicators, Eurostat also publishes flash estimates for GDP (after around 30 and 45 days) and employment (after around 45 days). Their compilation is based on estimates provided by most EU Member States on a voluntary basis.
Revisions and timetable
The reliability of GDP and employment flash estimates was tested by dedicated working groups and revisions are continuously monitored. Further information can be found on Eurostat website. The method used for compilation of European GDP and employment estimates is the same as for previous releases.
With these estimates, euro area and EU employment and GDP figures for earlier quarters are revised.
Flash estimates of employment and GDP growth were published in News Release 168/2020 issued on 13 November 2020. They were based on a more limited data set than the one used for the present News Release and additionally, on preliminary estimates which have now been revised by some Member States.