Productivity bounces back in UK

UK output per worker increased 1.4 per cent year-on-year in the second quarter of 2010, compared with 1.1 per cent growth in the previous quarter, official figures showed yesterday.

Output per hour worked, an alternative measure of labour productivity, showed that hourly productivity across the whole economy also increased 1.4 per cent year-on-year, up from a growth of 0.9 per cent in the previous quarter.

Meanwhile, manufacturing output per job increased by 7.9 per cent compared with the same quarter a year ago, up from growth of 7.3 per cent in the previous quarter.

Manufacturing output per hour increased by an annual rate of 5.7 per cent up from growth of five per cent the previous quarter.

Howard Archer, chief economist at IHS Global Insight said productivity may have benefited from “many companies having to adapt and streamline their operations to survive the recession with this leaving them leaner and fitter to compete.”

But he warned productivity could be adversely affected if public sector spending cuts led to significant infrastructure problems.

In a separate set of figures the ONS said service sector output fell for a second month in July, suggesting economic growth may have weakened in the third quarter.

The ONS said service sector output, which accounts for around 75 per cent of the economy, fell by 0.2 per cent in July after a similar fall in June. Service sector output was 1.2 per cent higher than a year ago, down from the 1.4 per cent a month earlier.

The fall in July was driven by a decline in “business services and finance” output and “government and other services”, the ONS said.