The German Federal Statistical Office issued final gross domestic product (GDP) details this morning. GDP rose 0.4% upon price, seasonal and calendar adjustment in the first quarter of 2006 compared with the previous quarter. Thus the economy recovered at the beginning of 2006, following a short stagnation in the last quarter of 2005.

Gross domestic product, price-adjusted, chain-linked

(figures adjusted for seasonal and calendar effects using Census X-12-ARIMA)

Changes on a quarter earlier:

 Compared with the previous quarter, both domestic and foreign demand contributed to economic growth in the first quarter of 2006: Final consumption expenditure of households and NPISHs and of general government increased in the reference quarter (+0.6% each). Also, capital formation was up especially for machinery and equipment (+2.2%) compared with the fourth quarter of 2005. This led to domestic uses contributing to quarter-on-quarter GDP growth (+0.1 percentage points) despite the weather-related decrease in capital formation in construction (–3.0%). Another 0.3 percentage points were contributed to growth by price-adjusted net exports because the rise in exports (+4.6%) was slightly larger than that of imports (+4.5%).

The following information refers to the year-on-year comparison:

Compared with a year earlier, the increase in the gross domestic product in the first quarter of 2006 (+2.9%) was the largest in six years. However, the number of working days available in the reference quarter was by three days larger than a year earlier, among other things because the Easter holidays were very late this year. When adjusted for that unusually large calendar effect, the economy grew by 1.4% in purely mathematical terms, which was slightly less than at the end of 2005 (calendar-adjusted GDP growth of +1.6% in the third quarter and of +1.7% in the fourth quarter of 2005).

Gross domestic product, price-adjusted, chain-linked (unadjusted figures)

Changes on a year earlier:

The economic performance in the first quarter of 2006 was achieved by about 38.3 million persons in employment, which was a decrease of 55,000 persons or 0.1% on a year earlier. The number of unemployed (international definition) was down by 447,000 persons or 10.5% to 3.8 million persons, thus decreasing for the third quarter in a row in a year-on-year comparison. The share of unemployed persons in the economically active population thus decreased from 10.0% in the first quarter of 2005 to 9.0% in the reference quarter.

 Overall labour productivity (price-adjusted gross domestic product per person in employment) in the first quarter of 2006 increased by 3.0% in a year-on-year comparison. Measured per hour worked, it rose by just 1.6% because the number of hours worked per person in employment increased. The main reason was the larger number of working days available as well as the further decreasing sickness figures.

As regards the production of the price-adjusted gross domestic product, all economic sectors with the exception of agriculture, forestry and fishing (–0.7%) contributed to the year-on-year economic growth in the reference quarter. The largest increase in the price-adjusted gross value added was recorded for industry, including energy (+7.1%) – of which especially for manufacturing (+8.1%) –, followed by construction (+5.0%), trade, transport and communications (+2.2%), financial, real estate, renting and business activities (+1.8%) as well as other service activities (+0.3%). Altogether, price-adjusted gross value added of all economic sectors was up 3.0%. 

As regards the use of the gross domestic product (price-adjusted), it was especially thanks to an increase in domestic demand that the economy recovered in a year-on-year comparison. Both final consumption expenditure of households and NPISHs (+1.1%) and government final consumption expenditure (+0.8%) were up in the first quarter of 2006 on a year earlier. Capital formation, too, contributed strongly to growth: In capital formation in construction, the downward trend that had been continuing for nearly two years changed into a marked increase (+4.3%) in the reference quarter. An even stronger rise was recorded for capital formation in machinery and equipment (+8.3%) and capital formation in other products was up, too (+3.0%) compared with a year earlier. Changes in inventories contributed 1.0 percentage points to GDP growth in the reference quarter.

The highly dynamic trend in foreign trade continued: The two-digit growth rate of exports (+14.2%) was however exceeded by the rise in imports (+16.2%), so that – despite the very large increases – net exports had nearly no effect on growth in a year-on-year comparison (+0.2 percentage points).

At current prices, the gross domestic product was up 3.2% and the gross national income was up 3.0% in the first quarter of 2006 compared with a year earlier. Net national income (factor costs) rose 3.2%, too. For the first time in one and a half years, compensation of employees showed stagnation (+0.0%) rather than a decrease, whereas property and entrepreneurial income was again markedly up (+9.2%). The disposable income of households rose 2.6% in the first quarter of 2006. The savings ratio of households decreased slightly at the usual high level in the first quarter of 2006 (from 14.3% in the first quarter of 2005 to 14.1% in the reference quarter).

In addition to calculating the figures for the first quarter of 2006 for the first time, the results published in February for the four quarters and the year of 2005 were checked and revised where necessary. Such continuous revisions are performed on a routine basis to be able to include as early as possible statistical information that has become available in the meantime. As regards the price-adjusted gross domestic product, the recalculations resulted in a higher seasonally and calendar adjusted growth rate for the second quarter of 2005 (from +0.3% to +0.4%); also, the year-on-year growth rates (unadjusted figures) for the second, third and fourth quarters of 2005 were revised upwards by 0.1 percentage points each (to +1.8%, +1.5%, +1.1%, respectively). Correspondingly, the annual result for 2005 was slightly revised upwards, too (from +0.9% to +1.0%).