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UK Q3 productivity growth weakest in two years

Office of National Statistics
Britain   Office of National Statistics

Labor productivity for the third quarter in 2018, as measured by output per hour, grew by just 0.2 percent year on year.


This is the weakest growth since the third quarter of 2016, according to data from the Office of National Statistics (ONS).

UK labour productivity is estimated to have decreased by 0.4 percent in third quarter, compared with the previous quarter, reflecting an increase in the number of actual hours worked, which outpaced output growth for the quarter, the ONS said.

While manufacturing experienced labour productivity growth of 1.7 percent, the significantly larger services only achieved 0.1 percent in the third quarter, continuing a disappointing overall performance over the first three quarters, according to the ONS.

The British economy has seen poor productivity since the recession of 2008, driven by low-wage growth which has encouraged firms to retain workers.

"The heightened possibility of the UK leaving the EU without a deal in March is currently causing some companies to limit their investment for the time being with damaging implications for productivity," said Howard Archer, chief economic adviser to the EY ITEM Club, a financial data analysis firm.

"Business investment fell for a third successive quarter in 2018," said Archer. "However, a Brexit deal and/or a transition period would provide a boost for business investment, and also productivity."

 

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