Productivity is improving in Britain

ECONOMIC productivity improved marginally by 0.5 per cent in the fourth quarter of 2009 on the previous three months reflecting the UK’s return to growth.

Nonetheless, whole economy output per worker fell 1.4 per cent on the same period in 2008 but this was still an improvement on the 3.3 per cent drop seen in the third quarter.

Overall, UK?output per worker fell 3.1 per cent in 2009 while output per hour worked fell 1.9 per cent. “The smaller fall in output per hour worked reflects the fact that many companies cut back more on hours worked than employees, said IHS Global Insight’s Howard Archer.

The more flexible labour market has meant that many have chosen to go part-time or work fewer hours rather than risk being laid off.

Archer added: “The overall sharp decline in output per worker in 2009 is due to the fact that the number of workers employed fell markedly less than GDP, reflecting the fact that the labour market has been fairly resilient during the economy’s travails.”

Manufacturing output per hour actually increased by 3.9 per cent in the fourth quarter of 2009 compared with the same three months in 2008. This was an improvement on the one per cent fall in output per hour suffered in the third quarter.

The Office for National Statistics (ONS)?said that the increase in the growth rate of manufacturing productivity was due to a decrease in the contraction rate of the sector’s output from -10.6 per cent to -4.9 per cent.

In contrast, the services sector saw a fall in productivity on an output per hour worked basis. It fell by 1.2 per cent in the fourth quarter but the better economic situation meant output improved from the third quarter.