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Although productivity (TFP) slowed down in the last quarter of 2024, the upward trend observed throughout the year was maintained

Now available: New update of the BBVA Foundation and Ivie database Productivity Tracker with data up to December 2024

Total factor productivity (TFP), a synthetic indicator of productive efficiency, increased 1.8% year-on-year in the fourth quarter of 2024, according to the most recent update of the BBVA Foundation and Ivie database Productivity Tracker. Although this percentage is one percentage point lower than the growth experienced in the previous quarter, the positive trend of 2024 is maintained compared to 2023 when the advancement of productive efficiency slowed down. The positive trend of economic growth based on increases in productive efficiency and job creation persisted in the fourth quarter of the year.

Strong job creation (41%), along with gains in productive efficiency (TFP), accounted for 48% of the high GDP growth in the last quarter  (3.6%). Capital continued to contribute 10%, similar to that of previous quarters.

Investment and hours worked grew strongly, by 2.8% and 3.5%, respectively, throughout the period. In the fourth quarter of 2024, the acceleration of employment limited the growth of labor productivity (per hour worked), which increased by only 0.87%, compared to the 2.4% in the previous quarter. At the same time, capital productivity growth remained around 2.4%, at year-on-year rates.

The increase in TFP in the fourth quarter of 2024 was intense in financial activities (10.7%) and primary sector (6.5%), while more moderate, but still notable, in services (2.0%). Manufacturing barely increased by 0.8%. In the energy sector and in construction, it decreased by 3.0% and 0.59%, respectively. In energy this evolution was due to the negative variation in GVA, while in construction the result is explained by the intense job creation that reduced labor productivity by 4%.