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| UK productivity growth hit a 10-year high in the second half of 2017, show official figures | UK productivity growth hit a 10-year high in the second half of 2017, show official figures |
| (35 minutes later) | |
| UK productivity rose 0.7 per cent in the final three months of 2017, and with the third quarter figure revised up to 1 per cent, together they represent the strongest growth since the second half of 2005, according to the Office for National Statistics (ONS). | UK productivity rose 0.7 per cent in the final three months of 2017, and with the third quarter figure revised up to 1 per cent, together they represent the strongest growth since the second half of 2005, according to the Office for National Statistics (ONS). |
| The ONS said the period between October and December last year was “the second consecutive quarter in which productivity growth has exceeded the pre-downturn average of 0.5 per cent per quarter”. | The ONS said the period between October and December last year was “the second consecutive quarter in which productivity growth has exceeded the pre-downturn average of 0.5 per cent per quarter”. |
| However, productivity was calculated on an output per hour basis, and so the increase was “largely driven by a fall in average hours worked”, the ONS said. | However, productivity was calculated on an output per hour basis, and so the increase was “largely driven by a fall in average hours worked”, the ONS said. |
| Meanwhile, revised estimates of labour productivity of the G7 show the UK continues to lag behind other major economies - UK labour productivity was around 16.3 per cent below the average for the other G7 economies in 2016. | Meanwhile, revised estimates of labour productivity of the G7 show the UK continues to lag behind other major economies - UK labour productivity was around 16.3 per cent below the average for the other G7 economies in 2016. |
| “This is a second successive quarter of strong productivity growth, although much of it comes from a fall in average hours worked. However, a weak start to the year means annual growth was only 1 per cent, half the historic average rate,” said ONS deputy chief economist Richard Heys. | “This is a second successive quarter of strong productivity growth, although much of it comes from a fall in average hours worked. However, a weak start to the year means annual growth was only 1 per cent, half the historic average rate,” said ONS deputy chief economist Richard Heys. |
| “The new analysis published this quarter throw fresh light on the UK’s continuing productivity puzzle, such as the impact of business management practices and the differences between regions.”# | |
| Howard Archer, chief economic adviser to EY’s ITEM Club, said: “At face value, it looks highly encouraging that the fourth quarter of 2017 saw a second successive quarter of much-needed, appreciable improvement in UK productivity. | |
| “However, it is notable that the sharp improvement in productivity in the second half of 2017 came amid a surprising, marked drop in hours worked over both the third and fourth quarters. | |
| “Nevertheless, the extent of the pick-up in productivity over the second half of 2017 fuels our belief that there is scope for UK businesses to use their workforce more efficiently in the future, thereby lifting productivity.” | |
| Mr Archer added: “Pressure for UK companies to get more out of their workers will likely come from recruitment difficulties in some sectors and a gradual trending up in pay growth. | |
| “Companies are likely to increasingly prioritize productivity-enhancing measures, and there is likely to be a growing incentive to undertake investment aimed at saving labour.” |