CHART OF THE WEEK
UK Labour Productivity
Summary: The official second quarter labour productivity figures were released at the end of last week, and they confirmed our speculation from August: that productivity has been falling more than previously thought.
What does the chart show? This chart shows a seasonally adjusted index of labour productivity in terms of output per hour worked, with 2009 as the base year. The blue line represents the figure for the whole economy, while the green and red lines are just for the manufacturing and service sectors respectively.
Why is the chart interesting? Despite initial first quarter figures showing that manufacturing productivity was increasing, these latest numbers suggest that productivity has in fact been falling in all sectors since at least the third quarter of 2011. Productivity in the service sector is now lower than it was back in 2009, and productivity for the whole economy is not far from that level. As we pointed out in August, this helps explain the fall in GDP while employment is increasing, and presents a real problem to politicians trying to kickstart growth in the UK economy.
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