Italy Outperforms Germany
Worth noting is that growth was 2.4% at an annual rate in Italy versus 1.6% in Germany. And while quarterly changes tend to be somewhat erratic, the 12 month change too was slightly higher in Italy than in Germany (1.5% versus 1.4%. All numbers are calendar adjusted). This again illustrates the fallacy of the widespread theory that it is relative unit labor costs that is the root of Italy's problem. As the case of Germany with its falling relative unit labor costs illustrates, lower unit labor costs may strengthen the sector with tradable goods, but it also increases relative costs for the domestic sectors.