Source: De Statis

De Statis, the German Federal Statistics Office, today reported detailed data on the economic performance of the Eurozone's largest economy in the fourth quarter of 2006.

GDP growth in 2006 was 2.7% while growth in the fourth quarter of the year was at an annual 3.5% rate.

The German economy grew strongly again towards the end of the year: The gross domestic product (GDP) rose by 0.9% in the fourth quarter of 2006 on the third quarter of 2006 upon price, seasonal and calendar adjustment. The GDP measures the value of the economic performance within the domestic territory. In the first three quarters of 2006, too, the economic performance in part grew even somewhat more strongly (+0.8%, +1.2% and +0.8%, respectively) than reported previously. 

Gross domestic product, price-adjusted, chain-linked
Changes on a quarter earlier: 

Economic growth in the fourth quarter of 2006 was again based both on domestic and foreign demand. However, the extremely dynamic foreign trade contributed by far more to the economic upturn in the reference quarter than did domestic demand: As the quarter-on-quarter increase of exports was much larger than that of imports, the price-adjusted net exports contributed 2.1 percentage points to economic growth. However, the strong rise in exports (+6.0% on the previous quarter) was positively influenced by belated declarations received in foreign trade statistics.

As regards domestic demand, especially increased gross fixed capital formation (+1.0%) and higher final consumption expenditure of households (+0.3%) made positive contributions to growth. Both capital formation in construction (+1.2%) and in machinery and equipment (+0.5%) were up again on the previous quarter. However, the massive reduction of inventories in the reference quarter had a downward effect on growth. Not considering changes in inventories, total domestic uses contributed 0.4 percentage points to GDP growth.

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

Compared with a year earlier, the GDP in the fourth quarter of 2006 increased 3.5%, that is even more strongly than in the first three quarters of 2006. When calendar-adjusted – the number of working days available in the reference quarter was by one day smaller than in the fourth quarter of 2005 – it was even 3.7%. Due to that unexpectedly strong growth towards the end of the year, also the provisional GDP growth rate for the year of 2006 released on 11 January 2007 has been revised to 2.7% (calendar adjusted +2.9%). 

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

Changes on a year earlier: 

The economic performance in the fourth quarter of 2006 was achieved by 39.7 million persons in employment, which was an increase of 452,000 persons or 1.2% on a year earlier. The number of unemployed (international definition) was down by 483,000 persons or 13.9% to just under 3 million persons, thus decreasing for the sixth quarter in a row in a year-on-year comparison. The share of unemployed persons in the economically active population thus decreased from 8.1% in the fourth quarter of 2005 to 7.0% in the reference quarter.

Overall labour productivity (price-adjusted gross domestic product per person in employment) in the fourth quarter of 2006 increased by 2.3% in a year-on-year comparison. Measured per hour worked, it rose by 2.6% because the number of hours worked on average per person in employment decreased slightly. The main reasons were the smaller number of working days available and an increase in the share of part-time employees.

As regards the production of the price-adjusted gross domestic product, all economic sectors with the exception of agriculture, forestry and fishing (–2.4%) contributed to economic growth in the fourth quarter of 2006. In construction, gross value added was up for the fourth quarter in a row, following a downward trend that had lasted for years: The 9.1% increase was almost twice as high as in the third quarter. In the industry (+4.9%), in trade, transport and communications (+4.3%), financial, renting and business activities (+2.6%) as well as other service activities (+0.4%), too, output was up on a year earlier. Altogether, price-adjusted gross value added of all economic sectors was up 3.2%.

As regards GDP use, growth in the fourth quarter of 2006 was based both on domestic and foreign demand, as was the case in the quarter-on-quarter comparison. However, also in a year-on-year comparison, the particularly dynamic foreign trade contributed by far more to the economic upturn in the reference quarter than did domestic demand: The continuing demand from abroad produced two-digit growth rates, which were even much higher for exports (+15.9% in real terms) than for imports (+10.3%). The resulting export surplus (net exports) contributed 2.8 percentage points to economic growth. As mentioned above, the strong increase in exports was positively influenced by belated declarations received in foreign trade statistics.

Domestic demand, too, contributed to economic growth in a price-adjusted year-on-year comparison: Both capital formation in construction (+7.4%) and in machinery and equipment (+6.0%) were considerably up towards the end of 2006 when compared with a year earlier. Also, consumption continued to rise: One of the reasons for the marked increase in final consumption expenditure of households (+1.5%) is probably anticipated purchases with a view to the VAT rise. To satisfy the increased domestic and foreign demand, stocks were increasingly reduced: That massive reduction of inventories in the reference quarter had a downward effect on GDP growth.

At current prices, the gross domestic product was up 3.7% in the fourth quarter of 2006. The gross national income rose somewhat more strongly by 4.1% compared with a year earlier. Net national income (factor costs) increased 4.5% in the reference quarter. The latter increase, however, was unevenly distributed between the two components: Compensation of employees rose moderately (+2.0%), while property and entrepreneurial income was up considerably again (+10.7%). The disposable income of households rose 2.1% in the fourth quarter of 2006. The savings ratio of households in the reference quarter (9.0%) decreased slightly from the fourth quarter of 2005.

In addition to calculating the figures for the fourth quarter of 2006 for the first time, the results previously published for the first three quarters of 2006 and for the year of 2006 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.

The recalculations resulted in growth rates for the price-adjusted GDP that were by up to 0.3 percentage points higher than the provisional results for the second and the third quarter of 2006. Those upward corrections are mainly due to better results for manufacturing and construction as well as for capital formation in construction. The annual result for 2006 was revised upwards by 0.2 percentage points.