20150413-NATIXIS-Jobless_recovery__14页_670kb

Summary of FLASH ECONOMICS ECONOMIC RESEARCH - No. 290 (April 13, 2015)

Core Content

This report examines the possibility of a "jobless recovery" in the euro zone, particularly in France, by analyzing the relationship between economic growth, employment, and productivity. A jobless recovery is defined as economic growth occurring without a corresponding increase in employment, which can happen in two scenarios:

1. Productivity Reserves: Companies maintain excess staff during a recession, allowing them to extend working hours or reduce labor input during recovery without hiring new workers.
2. High Productivity Sectors: Economic growth is driven by sectors with significant productivity gains, which can expand without creating new jobs.

The report compares the United States and the four largest euro-zone countries (Germany, France, Spain, Italy) to determine whether these conditions are present in the current recovery.

Main Findings

1. Productivity and Employment Dynamics

• United States:

  • Per capita productivity has returned to its trend since 2010.
  • Employment reacts quickly to economic growth, and there is no productivity shortfall.
  • Both industry and services sectors are recovering, contributing to job creation.

• Germany:

  • Per capita productivity is abnormally low (by 8%) at the end of 2014.
  • Employment adjusts slowly (seven quarters), leading to a productivity gap.
  • Recovery is driven by services, not industry, which may limit job creation.

• France:

  • Per capita productivity shortfall is small (around 3%).
  • Employment adjusts faster than in Germany (four quarters).
  • Recovery is driven by services, which have lower job creation potential compared to industry.

• Spain:

  • No productivity shortfall, but a small shortfall in working hours.
  • Employment reacts quickly to growth, and the recovery is driven by both industry and services.

• Italy:

  • Per capita productivity is significantly low (by 7%).
  • Employment adjustment is slow, and there is a sharp decline in working hours.
  • Recovery is weak in both industry and services sectors, raising concerns about jobless growth.

2. Sector Structure of Recovery

• United States:

  • Recovery is driven by both industry and services, leading to broad job creation.

• Germany:

  • Services are the primary driver of recovery, with limited job creation due to low productivity gains in this sector.

• France:

  • Services dominate the recovery, with relatively modest productivity gains.

• Spain:

  • Recovery is balanced between industry and services, leading to a more stable employment trend.

• Italy:

  • No significant recovery in either industry or services, leading to weak employment growth.

3. Conclusion on Jobless Recovery

• A jobless recovery is unlikely in the euro zone this time because:

  • Productivity Reserves: None of the examined countries show a significant buildup of productivity reserves.
  • Sectoral Productivity: The recovery is not concentrated in sectors with high productivity gains, which would allow growth without job creation.

• United States is an exception, as its productivity has returned to trend and the recovery is job-generating.

Key Information

• The report uses cyclical indicators and productivity data to assess the risk of jobless recovery.
• Charts are used to illustrate GDP, employment, and productivity trends across different countries and sectors.
• The analysis highlights the importance of sectoral composition in determining job creation during economic recoveries.
• The report is intended for professional clients and qualified investors only, and it is not a personalized investment recommendation.

Disclaimer

• The document is not a financial analysis and has not been prepared in accordance with legal requirements to promote the independence of investment research.
• It is based on public information and does not constitute an offer or solicitation for any purchase, sale, or subscription.
• No liability is accepted for any financial loss or decisions based on the information provided.
• The document is subject to legal restrictions in certain jurisdictions and must be handled accordingly.
• Natixis is authorized and regulated in various countries, including France, the UK, Germany, Spain, and Italy, and is subject to the relevant financial authorities.