According to provisional data from the Federal Statistics Office the price-adjusted German gross domestic product (GDP) rose 2.5% on the previous year. When examining the calendar-adjusted figures – the number of working days was by 1.6 days smaller in 2007 than in the year before – the GDP growth rate was 2.6% in 2007.
As regards the use side, economic growth was based on both foreign and domestic demand. Price-adjusted exports saw a by far higher rise (+8.3%) than imports (+5.7%). The increased export surplus (net exports) contributed 1.4% percentage points to GDP growth, while the contribution of domestic uses was one percentage point. This development was above all determined by gross fixed capital formation in machinery and equipment: In 2007, capital formation of enterprises in new machinery, equipment and vehicles again increased considerably (+8.4%) on a year earlier. Final consumption expenditure contributed 0.2 percentage points to economic growth. However, only final consumption expenditure of general government had a positive impact (price-adjusted growth rate +2.0%), while the real final consumption expenditure of households declined 0.3% on a year earlier. On an annual average in 2007, the economic performance was achieved by slightly more than 39.7 million persons in employment, which was an increase of 649,000 persons (+1.7%) compared with the preceding year.
According to provisional calculations,net lending and net borrowing of general government (including central government, state government, local government and social security funds) were in balance in 2007. When put in relation to the GDP at current prices the financial position ratio is in the black. On 14 February 2008, the Federal Statistical Office will publish first national accounting results for the fourth quarter of 2007 and the revised results for the year 2007 (only GDP); on 26 February, the detailed results will be released.
On an annual average in 2007, the economic performance was achieved by slightly more than 39.7 million persons in employment, which was an increase of 649,000 persons (+1.7%) compared with the preceding year. Hence employment reached its highest level since German reunification in 2007. According to provisional results of the labour force survey, the number of unemployed persons (international definition) decreased by 641,000 (−15.1%) to 3.6 million. Increases in labour productivity measured as the price-adjusted gross domestic product per person in employment and per hour worked amounted to 0.8% each in 2007. Hence they were clearly below the growth rates (+2.2% and +2.4%, respectively) observed in 2006.
As regards the production side of the gross domestic product (price-adjusted), all economic sectors had a positive impact on economic growth in 2007. Industry experienced a particularly strong growth. Its gross value added was up 5.2% on a year earlier. Economic performance also saw a clear rise in trade, transport and communications (+2.3%), in financial, real-estate, renting and business activities (+3.1%) and in agriculture, hunting, forestry and fishing (+2.7%). Furthermore economic performance improved by 1.7% in construction. However, the economic upturn which started in 2006 (at that time, price-adjusted gross value added increased 5.4%) thus slowed down markedly.
Gross value added of other service activities increased 0.6% on the previous year. As regards the use of the gross domestic product, economic growth in 2007 was based on both foreign and domestic demand. The continued foreign demand for German goods and services led to an 8.3% increase in exports. The rise observed in imports was 5.7% and hence clearly below the export level. The resulting price-adjusted export surplus (net exports) contributed 1.4% percentage points to GDP growth. Domestic uses contributed one percentage point to growth based, above all, on gross fixed capital formation. In price-adjusted terms, the latter saw an increase of 4.9% on 2006. Gross fixed capital formation in machinery and equipment again had a substantial effect on growth: Capital formation of enterprises in machinery, equipment and vehicles increased 8.4% on a year earlier.
However, gross fixed capital formation in construction was up not more than 2.0%. This increase was almost completely attributable to gross fixed capital formation in non-residential buildings, which rose 4.3%. Hence the positive development of 2006 continued (+4.3%, too). Price-adjusted gross fixed capital formation in residential construction climbed only 0.3%. Thus the growth rate was clearly smaller than the rate recorded a year earlier (+4.3%). Final consumption expenditure contributed 0.2 percentage points to economic growth.
However, only final consumption expenditure of general government had a positive effect on growth (price-adjusted growth rate +2.0%). Final consumption expenditure of households declined 0.3% in 2007 on a year earlier, which resulted in a negative contribution to growth of 0.2 percentage points. In 2006, final consumption expenditure of households still made a positive contribution to growth (0.6 percentage points). Certainly, the above two results also reflect the rise in value added tax which led to purchases in 2006 that had originally been planned for a later time. The national income (factor costs), the two components of which are compensation of employees and property and entrepreneurial income, rose to EUR 1,825 billion (+ 4.2%) in 2007. While compensation of employees (EUR 1,180 billion) was up 2.6% on a year earlier, property and entrepreneurial income saw an increase of 7.2% to EUR 645 billion.
The share of compensation of employees in the national income at factor costs (wage ratio) declined to 64.6%; that was one percentage point less compared with the previous year. Gross wages and salaries increased to EUR 954 billion (+3.1%) in 2007. The last time a higher increase was recorded was in 2000 (+3.4%). Net wages and salaries, which are obtained after deduction of wage tax and employees’ social contributions, amounted to nearly EUR 620 billion and hence were 2.3% above the level of the previous year. While employees’ social contributions recorded a comparatively moderate rise of 2.7%, employee wage tax was up 6.2% according to first provisional results. This strong increase was, among other things, due to the clear rise observed in the number of jobs fully subject to social insurance contributions and to changes in income tax law (for instance, elimination or restriction of commuter tax allowance).
The number of employees was up 1.7% in 2007. Average gross wages and salaries (per employee) climbed 1.3%, while average net wages and salaries increased 0.5%. In 2007, the disposable income of households rose 1.6% to EUR 1,518 billion. Compared to 2006, consumer reticence of households was again stronger in 2007 so that the growth (+1.4%) of household final consumption expenditure (at current prices) was even smaller than the moderate increase observed in the disposable income. The saving ratio climbed to 10.8%, which was an increase of 0.3 percentage points on a year earlier. According to provisional calculations,net lending and net borrowing of general government (including central government, state government, local government and social security funds) were in balance in 2007. When put in relation to the GDP at current prices the financial position ratio is in the black. On 14 February 2008, the Federal Statistical Office will publish first national accounting results for the fourth quarter of 2007 and the revised results for the year 2007 (only GDP); on 26 February 2008, the detailed results will be released.
The results published in August 2007 for the years 1991 to 2006 have not been revised, as is always the case at this time of the year. The above and other national accounts data may be accessed via the internet (http://www.destatis.de/). In addition, more detailed results are published in Fachserie 18 “Volkswirtschaftliche Gesamtrechnungen”, Reihe 1.1 “Erste Jahresergebnisse” (order number 2180110). The above and other publications can be downloaded free of charge from the Publication Service of the Federal Statistical Office at http://www.destatis.de/publikationen.
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