European GDP growth slows

The gross value added to gross domestic Product (GDP) by construction in the Euro Area* increased +0,7% in the third quarter (Q3) of 2006 compared to the previous quarter, according to Eurostat. Construction’s contribution to GDP in the 25 countries that form the EU (EU25), also grew +0,7% in the third quarter of 2006, compared to the second quarter.

The report suggests that the value of the construction sector in the Euro Area stood at over € 120 billion in Q3 2006, while the industry for the EU25 for the same period was valued at almost € 158 billion.

However, the new quarter-on-quarter figures for Q3 2006 represent a significant slowing of growth from the +2,4% and +2,2% gains recorded for construction in the Euro Area and EU25, respectively, during the second quarter of 2006. But despite the slower rate of growth in construction, the increase recorded was higher than overall quarter-on-quarter GDP growth in both the Euro Area and EU25 for the second consecutive quarter.

Eurostat estimates that overall GDP in Q3 2006 increased +0,5% in the Euro Area and +0,6% in the EU25, compared to the previous three months. This is down on the growth rates of +0,8% and +1,0% recorded in both areas during the first and second quarters of 2006, respectively.

The slowing growth in overall GDP between Q2 and Q3 in 2006 has been attributed to a lower level of investment in both the Euro Area and EU25, and rising imports not being offset by similar increases in exports. According to the report, a slower rate of quarter-on-quarter growth was also recorded in Q3 2006 by industry including energy, agriculture, financial services, and trade, transport and communication services sectors.

Year-On-Year

Comparing the GDP for Q3 2006 to Q3 2005 shows more positive gains for overall GDP, but is still behind those displayed in the previous three months. GDP was up +2,7% in the Euro Area and rose +2,9% in the EU25 compared to Q3 2005. Nonetheless, this is still lower than the +2,8% and +3,0% increase shown in Q2 2006 compared to the same three months in 2005.

However, the year-on-year gains for the gross value added by construction show an upward trend rising from +3,4% in Q2 to +3,8% in Q3, compared to the same period last year, for the Euro Area. While construction’s contribution to GDP in the EU25 rose from +3,3% in Q2 to +3,9%, compared to 2005.

Worldwide

Quarter-on-quarter GDP growth in the US also slowed slightly in Q3 to +0,5%, compared to +0,6% in Q2. Year-on-year growth also weakened from +3,5% in Q2 to +3,0% in Q3. In Japan, GDP growth was up +0,5% in Q3 compared to the previous quarter, where gains of +0,4% were recorded. Year-on-year growth in Japan remained steady at +2,7%.

* The Euro Area covered by Eurostat is Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland.       ce