Archive:Business economy - evolution of production, employment and turnover
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- Data from January 2009, most recent data: Further Eurostat information, Main tables and Database
This article belongs to a set of statistical articles which analyse the structure, development and characteristics of the various economic activities in the European Union (EU). The present article is part of the business economy overview, and covers the evolution of:
- production;
- employment;
- turnover.
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Main statistical findings
The long-term evolution of the EU-27 index of production for industry rose rapidly during two distinct periods between 1997 and 2007, interspersed by a three-year period of stagnation from 2000 to 2003 (see Figure 1). The working-day adjusted EU-27 index of production rose on average by 2.7 % per year between 2003 and 2007, with the fastest rates of growth being registered in 2006 and 2007 (3.9 % and 3.3 % respectively).
EU-27 output for construction followed a similar path – although overall growth was slightly lower – despite unbroken, positive year-on-year rates of change. As with industrial output, the fastest expansion in construction activity was recorded towards the end of the time-series in 2006 and 2007.
Among the service sectors (see Figure 2), the EU-27 index of turnover for business services (NACE Divisions 72 and 74) and for transport, storage and communication (NACE Section I) rose particularly strongly in the period between 2000 and 2007, on average by 7.0 % and 6.7 % per year. The remaining four services that are presented also reported a positive evolution to their respective current price sales indices, averaging between 5.1 % and 3.5 % per year.
The EU-27 index of employment for industrial activities showed a steady decline during the period 1997 to 2007, with reductions averaging 1.2 % per year. In contrast, there was employment growth within the construction sector, which accelerated from 2005 onwards. Each of the services that are presented in Figure 3 reported an expansion in their respective numbers of persons employed between 1998 and 2007. There was relatively fast average growth recorded for business services (4.6 % per year), as well as for accommodation and food services (2.2 % per year), while employment levels for transport, storage and communication remained almost unchanged.
Evolution within industrial activities
On average, the index of production for total industry rose by 2.1 % per year during the period 1997 to 2007. This measure of output grew for the majority of the NACE subsections that appear in Figure 4. Indeed, there were only three exceptions, the extraction of energy producing materials (NACE Subsection CA), the manufacture of textiles and clothing (NACE Subsection DB) and the manufacture of leather and footwear (NACE Subsection DC). In contrast, the highest average rates of growth were recorded for electrical machinery and optical equipment (NACE Subsection DL), transport equipment manufacturing (NACE Subsection DM) and the manufacture of chemicals, chemical products and man-made fibres (NACE Subsection DG).
While output generally rose across industrial activities, the same could not be said for the number of persons employed. The employment index for total industry fell in the EU-27 by an average of 1.2 % per year during the period from 1997 to 2007 – see Figure 5 – reinforcing the notion of productivity gains. The only industrial subsection that reported any substantial increase in its workforce during the period under consideration was rubber and plastic products manufacturing, while there were larger employment gains in the construction sector.
Evolution within service sectors
During the five-year period from 2002 to 2007, the EU-27 index of turnover increased for each of the NACE divisions within the non-financial services sector for which data are available – see Figure 6. The highest rates of sales growth tended to be reported for transport services, with average growth of 8.3 % per year for water transport, 7.6 % per year for land transport and transport via pipelines, and 7.3 % per year for air transport services. The slowest rates of turnover growth were registered for accommodation and food services (3.5 % per year) and retail trade and repair (3.4 % per year).
In contrast to the industrial economy, the evolution of employment within services tended to show that the number of persons employed rose for the majority of activities across the EU-27. The sharpest rate of increase between 2002 and 2007 was registered for other business activities (NACE Division 74), where the workforce expanded, on average, by 4.0 % per year. There were two service activities – air transport services and post and telecommunications – that reported reductions in their respective workforces between 2002 and 2007 (see Figure 7).
Recession at the end of 2008 and start of 2009
The information presented in the structural business statistics articles does not include annual short-term business statistics for reference year 2008, as these were unavailable at the time that data was extracted. As such, the annual time-series that are presented fail to show the downturn in economic fortunes that occurred during the second half of 2008, as the credit crisis in sub-prime markets, falling stock market indices and a reduction in consumer and business confidence led to recession.
In order to put the recession into some context, the EU-27’s seasonally adjusted index of production for total industry peaked in May 2008. However, only six months later in November 2008, industrial output was 8.2 % lower than it had been a year before. Most industrial activities reported a turning point in their respective levels of production in either late 2007 or the first half of 2008. One of the largest contractions was recorded for the motor vehicles manufacturing activity, where production fell by 21.0 % during the period November 2007 to November 2008.
Other areas of the non-financial business economy were generally less affected by the contraction in activity. Nevertheless, the EU-27 index of production for construction fell by 4.3 % between November 2007 and November 2008. Among services, while there was evidence of a slowdown in activity, this was rarely translated into an absolute reduction. The main exceptions were the motor trades sector, where current price sales fell by 8.1 % during the period October 2007 to October 2008, while EU-27 sales for accommodation and food services as well as for post and telecommunication services stagnated. There was also a slight downturn in the volume of sales within the retail trade and repair sector, down by 0.4 % between November 2007 and November 2008.
Data sources and availability
The main part of the analysis in this article is derived from short-term statistics (STS).
Context
The index of production for industrial activities and that for construction shows the development of value added at constant prices. This indicator provides information on the speed and direction of change, in particular showing the cyclical evolution of activity (which is often related to general economic developments within the whole economy).
As no production index exists for services, an index of turnover is used instead to analyse the evolution of output. Note that this is generally based on a current price series (and as a result includes the effects of price increases) – the retail trade sector is the only exception, as an index is available to measure the volume of retail sales.
Further Eurostat information
Publications
- European Business: Facts and figures - 2009 edition