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Productivity grows by 0.9% in Q1 2025, continuing the slowdown trend since the peak in mid-2024

The BBVA Foundation and the Ivie have published a new issue of the Productivity Tracker with the latest available data on productivity in Spain, for the first quarter of 2025. During this period, total factor productivity (TFP)—a synthetic indicator of productive efficiency—grew by 0.9% year-on-year. This figure is 38% lower than the growth for 2024 as a whole (1.5%) and similar to the rate in 2023. The virtuous cycle of economic growth driven by improvements in productive efficiency, evident from mid-2023 and throughout 2024 appears to be losing momentum.

Hours worked continued to grow strongly at an annual rate of 2.0%, while investment accelerated by 4.0% in the first quarter of 2025. These factors—investment and robust employment growth—were the primary drivers of GDP growth, whereas gains in productive efficiency played a more modest role.

Job creation accounted for 44.3% of the notable GDP growth in the first quarter of 2025 (3.1%), while capital contributed 26.3%, a level similar to the last quarter of 2024 but higher than in earlier quarters. The contribution of TFP slowed compared to 2024 and, although it remains positive (29.4%), it was substantially lower than the 2024 average of 41.7%.

Labor productivity (measured per hour worked) rose by 1.0%, similar to the previous quarter, and capital productivity increased by 0.6%, a slower pace than in prior quarters.

The increase in TFP in the first quarter of 2025 was strongest in the primary sector (3.5%) and more moderate, yet meaningful, in services (1.0%) and manufacturing (1.0%). In contrast, TFP declined in energy and construction sectors by 2.5% and 1.1%, respectively. In both cases, the result is determined by intense job creation, which reduced productivity (-5.5% in energy and -1.9% in construction).