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Productivity Takes a Jump?

17 November 2017 | Updated 01 January 1970

According to the Office for National Statistics (ONS) main measure of labour productivity July to September (Quarter 3) 2017 saw an rise increase by 0.9%.

This compares with a fall of 0.1% in April to June. Following two quarters of falling labour productivity, this is the fastest growth rate since 2011, resulting in a level of productivity slightly higher than its pre-downturn peak. Output per worker grew slower than output per hour, at a rate of 0.4%.

Output per hour growth in Quarter 3 was the result of a 0.4% increase in gross value added (GVA) (using the preliminary gross domestic product estimate) accompanied by a 0.5% fall in total hours worked (using the latest Labour Force Survey data). This fall in total hours was driven primarily by a 0.5% fall in average hours per worker.

The data may be revised in subsequent months.



UK productivity growth has been relatively weak (in particular since the onset of the economic downturn in Quarter 1 2008) – as a result of the relative strength of the labour market as compared with Gross Domestic Product (GDP).

Both employment – which captures the total number of people in work – and total hours – which captures both changes in employment and working patterns – fell in the course of the economic downturn but total hours fell further reflecting falls in the average hours of those in employment. However, as GDP fell by a larger proportion in the economic downturn than either hours or employment and has grown slowly by historical standards during the recovery, productivity growth has been subdued since the downturn and has recovered more slowly than following previous downturns.

In Quarter 3, it is indicated the economy was around 9.3% larger than the pre-downturn level, while employment and total hours were around 8.0% and 7.7% above their pre-downturn levels respectively.


Services and retail

Services GVA grew by 0.4% in Quarter 3 2017, where the largest contribution came from finance and business services industries – which contributed 0.19 percentage points to whole economy GVA growth. Among individual industries, the largest contributions to whole economy GVA growth came from computer and programming activities (0.05 percentage points), wholesale and retail of motor vehicles (0.04 percentage points) and retail trade excluding motor vehicles (0.04 percentage points).



In production, manufacturing output grew by around 1%, following a decrease of 0.3% in the previous quarter. In addition, mining and quarrying output increased by 1.5%; electricity, gas, steam and air conditioning increased by 0.4%; and water supply, sewage, waste management and remediation activities increased by 0.4%.



Increases in production and services GVA were partially offset by construction output falling by 0.7%, following a fall of 0.5% in the previous quarter.

Picture: Courtesy of Futura Industries - according to the ONS productivity stats, manufacturing output grew by around 1%, following a decrease of 0.3% in the previous quarter

Article written by Brian Shillibeer | Published 17 November 2017


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