The strong increases in investment in the first quarter are a positive signal, especially as they also applied to equipment investment. It is to be hoped that this is not just a flash in the pan. After all, equipment investment had previously fallen three quarters in a row.
However, the weak performance of labor productivity remains puzzling. In the first quarter of 2017 the number of people in work was 1.5% up on a year earlier, but the increase in real gross domestic product was a mere 1.9%, signifying an increase in labor productivity per employee of only 0.4%. Viewed positively, however, this can be seen as pointing to very job-intensive economic growth.
The 0.6% growth seen in the first quarter is fully in line with our expectations. We are therefore sticking with our forecast of a 1.7% increase in real gross domestic product on average in 2017.