Wednesday 9 January 2019 9:54 am

UK labour productivity falls in ‘very weak’ quarter

Reporter at City A.M. covering banking, markets and insurance

Reporter at City A.M. covering banking, markets and insurance

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UK labour productivity decreased 0.4 per cent in the third quarter of last year, while annual growth was at its weakest in two years.

Output per hour fell 0.4 per cent compared with the previous quarter and grew just 0.2 per cent on the third quarter of 2017, according to the Office for National Statistics.

Head of productivity at ONS Katherine Kent said: “Growth in labour productivity remained very weak in the third quarter, at around a tenth of its historic trend rate.

“Within this the private sector saw productivity growth, whereas for the public and charitable sectors productivity fell.”

ONS said the decrease reflected an increase in the number of hours worked, which outpaced growth over the quarter.

“The relapse reinforces concerns over the UK’s overall poor productivity record since the deep 2008/2009 recession,” EY Item Club economist Howard Archer said.

“Part of the UK’s recent poor labour productivity performance has undoubtedly been that low wage growth has increased the attractiveness of employment for companies,” he added.

It is the second quarterly decline in the first three quarters of the year after the opening months of 2018 were plagued by bad weather.

Year-on-year it is the eighth consecutive quarterly rise, although the pace of growth has slowed as the ONS said the UK’s ‘productivity puzzle’ continued.

The 0.2 per cent growth when compared with the third quarter of 2017 is the weakest growth in two years.

The number of jobs has also increased one per cent since the third quarter of 2017, while hours worked jumped 1.3 per cent over the same period.