THE UK’S official stats body insisted yesterday that its estimates of weak productivity across the economy are correct, pointing at tight lending markets, underemployment, and falling real wages as possible causes.
The Office for National Statistics (ONS) has been questioned by some analysts this year, as it has reported shrinking GDP at the same time as improving employment rates.
Yesterday’s report says statistical errors “cannot be ruled out”, but touts ONS “methodological rigour” as making such errors unlikely.
Tight credit conditions are forcing firms that want to expand production to hire employees instead of investing in physical capital, it suggests.
Another possible explanation for the divergence between output and employment, the ONS says, is the 980,000 rise in underemployment since 2008 – workers are being given fewer hours instead of being sacked.
The ONS rejected the idea that firms are “hoarding labour” as inconsistent with the data.
City A.M. Reporter