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UK productivity rises by 0.1% after year of contraction

By Ramla Soni

Wages outstrip increase in output again as weak gains of the past decade continue

Labour productivity measured by output per hour in the UK rose slightly in the third quarter of 2019 by 0.1 per cent after a year of contraction, the Office for National Statistics (ONS) revealed.

In the second quarter of 2019 it had fallen 0.6 per cent compared with the previous year.

Output per job rose by 0.1 per cent in in the third quarter of 2019 compared with the same quarter in the previous year, with gross value added (GVA) growing slightly faster than the number of jobs.

Services sector productivity, accounting for 80 per cent of the economy, was up 0.1 per cent and the figure for construction rose by 5.7 per cent. However, manufacturing saw a 1.9 per cent decrease.

Compared with the same quarter a year ago, labour costs increased by 3.6 per cent. This means growth has been above 2 per cent for nine consecutive quarters, a level last hit at the end of 2018, as wages rose faster than productivity gains.

Meanwhile, productivity for total public services fell by 0.2 per cent in the third quarter of 2019 compared with the same quarter in the previous year, continuing the trend of weak growth over the last two years.

The quarter saw the first quarter-on-quarter fall in output since the first quarter of 2018, and the largest quarter-on-quarter fall in output since the first quarter of 2013.

Katherine Kent, head of productivity at ONS said: “Although productivity grew on the year, the underlying picture is of sustained weakness since 2008, with growth over the past year being only a third of the average over the past 10 years or so.”

UK productivity has grown at a poor rate of just 0.3 per cent in the past decade and in the ten years from 1997 has grown 2 per cent each year.

FURTHER READING: Uncertain future for UK economy

FURTHER READING: UK labour market freezes

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