Press Detailed gross domestic product results for the 1^st quarter of 2018

Press release No. 182 of 24 May 2018

Gross domestic product, 1^st quarter of 2018
• +0.3% on the previous quarter (price, seasonally and calendar-adjusted)
• +1.6% on the same quarter a year earlier (price-adjusted)
• +2.3% on the same quarter a year earlier (price and calendar adjusted)

WIESBADEN – The German economy continued to grow also at the beginning of the year, though at a slower pace. As the Federal Statistical Office (Destatis) already reported in its first release of 15 May 2018, the gross domestic product (GDP) increased 0.3% - upon price, seasonal and calendar adjustment - in the first quarter of 2018 compared with the fourth quarter of 2017. This is the 15th quarter-on-quarter growth in a row, contributing to the longest upswing phase since 1991. Last year, GDP growth rates were higher (+0.7% in the third quarter and +0.6% in the fourth quarter of 2017).

Quarter-on-quarter contributions to growth came from domestic demand
The quarter-on-quarter comparison (price, seasonally and calendar-adjusted) shows that positive contributions came from domestic demand. Especially fixed capital formation increased markedly at the beginning of the year. Gross fixed capital formation in machinery and equipment rose 1.2% on the fourth quarter of 2017. Gross fixed capital formation in construction was up by as much as 2.1%. Also, household final consumption expenditure increased slightly (+0.4%). Government final consumption expenditure, however, decreased for the first time in almost five years (–0.5%) and had a downward effect on GDP growth.
Development of foreign trade was less dynamic, according to provisional calculations. Total exports of goods and services were down 1.0% compared with the fourth quarter of 2017 (price, seasonally and calendar-adjusted). Imports decreased to a similar extent (–1.1%) at the beginning of the year. Arithmetically, the balance of exports and imports had a downward effect of –0.1 percentage points on economic growth.

Year-on-year comparison shows slightly lower economic growth
Economic growth decelerated somewhat also in a year-on-year comparison. The price-adjusted GDP rose by 1.6% in the first quarter of 2018 on the first quarter of 2017, following increases of 2.2% in the third quarter of 2017 and 2.3% in the fourth quarter of 2017.

When adjusted for the rather strong calendar effect, caused by the timing of public holidays, arithmetic GDP growth was 2.3%. In the third quarter of 2017, the calendar adjusted GDP was up by 2.7% year-on-year, in the fourth quarter of 2017 by 2.9%.

Strong increase in number of persons in employment also at the beginning 2018
The economic performance in the first quarter of 2018 was achieved by 44.3 million persons in employment, which was an increase of 609,000, or 1.4%, on a year earlier (see press release 166/18 of 14 May 2018).

Overall labour productivity (price-adjusted gross domestic product per hour worked by persons in employment) was up 1.5% on the previous year, according to provisional calculations. Measured per person in employment, labour productivity rose just slightly by 0.2%. The average number of hours worked per person in employment was markedly down on a year earlier. This is shown by first provisional calculations of the Institute for Employment Research of the Federal Employment Agency.

Growth contributions mainly came from domestic demand also in a year-on-year comparison
In a year-on-year comparison, too, contributions to growth were mainly made by domestic demand in the first quarter of 2018. Household final consumption expenditure was up by 1.4%, government final consumption expenditure by 1.0%. Compared with the first quarter of 2017, gross fixed capital formation in machinery and equipment grew a price-adjusted 4.4%. Gross fixed capital formation in construction was up by 1.3%. A year-on-year increase was recorded especially in housing construction. On the whole, domestic uses rose by 1.6%.

In the first three months of 2018, both exports (+3.0%) and imports (+3.3%) of goods and services were up on the same period of the previous year, according to provisional calculations. Arithmetically, the balance of exports and imports had an effect of +0.1 percentage points on GDP growth compared with the previous year.

Gross value added higher in almost all economic sectors
On the production side of the gross domestic product, price-adjusted gross value added at the beginning of 2018 was higher than a year earlier in all economic sectors with the exception of agriculture, forestry and fishing and other services. The highest growth rates were recorded for information and communication services (+3.2%), manufacturing (+2.4%) and trade, transport, accommodation and food services (+2.3%). On the whole, the price-adjusted gross value added of all economic sectors was up 1.7% on the first quarter of 2017.

Strong increase in compensation of employees
At current prices, the gross domestic product was up by 3.5% and the gross national income by 3.9% in the first quarter of 2018 on the first quarter of 2017. Net national income at factor cost rose a total 4.0%. According to provisional calculations, the compensation of employees (+4.6%) grew markedly faster than property and entrepreneurial income (+2.9%). Gross wages and salaries of employees rose by 4.7% and net wages and salaries by 4.5% on a year earlier. The average wages and salaries per employee did not rise that much (2.9% in gross terms and 2.7% in net terms) because the number of employees went up as well (+1.7%) compared with the same quarter one year earlier. The disposable income of households increased by 3.3%, this rise being slightly higher than that of household final consumption expenditure at current prices (+2.9%).

Revision of previous results
In addition to calculating first data for the first quarter of 2018, the Federal Statistical Office reviewed the national accounting results published previously for the quarters and the year of 2017. This did not result in any changes of the gross domestic product data published so far. However, in part marked corrections were made for some GDP components. Also, interest payments made by general government over the last four years (from 2014) were revised. This led to an improvement in net lending/net borrowing of general government by up to 6.19 billion euros per year. As is usual for seasonally and calendar-adjusted series, modified results may also appear in the whole time series from 1991 onwards.

National accounts data may be accessed via the Destatis website. More detailed results are published in Fachserie 18 “National accounts”, Series 1.2 “Quarterly results“ and Series 1.3 “Seasonally adjusted quarterly results using Census X-12-ARIMA and BV 4.1”. The above and other publications can be downloaded. A detailed quality report on national accounts is available.