UK Labor Productivity Rises Most Since 2011

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United Kingdom labour productivity, measured by output per worker per hour, rose by 0.9% in the third quarter, according to data from the Office for National Statistics (ONS).

The figure marked a first rise since late 2016, and the biggest increase since the second quarter of 2011.

The strong figure is a bounce back from falls of 0.5 per cent and 0.1 per cent in the first and second quarters respectively.

Today's figures showed productivity was still 16.6 per cent below its pre-downturn trend, or 19.8 per cent below where it was expected to be by now.

There has been a sharp rise in United Kingdom productivity - long blamed for holding back the country's economic growth.

But Howard Archer, EY ITEM Club's chief economic adviser, said there were indications 2017's statistics could end on an unexpected high.

"The rebound in productivity in the third quarter is highly welcome, but it needs to be seen in the context of a particularly poor first-half performance".

The data showed the fightback was driven by the manufacturing and services sectors, which both recorded increases of 1% compared with the previous three months.

The growth of earnings and other labour costs also outpaced that of productivity, resulting in unit labour cost growth of 1.3% in the year to 3 2017, the lowest since Q2 2015.

"Given the uncertain economic and political outlook, it may be that several companies are trying to meet extra work by taking on labour rather than commit to investment". The relatively low cost of labour relative to capital certainly supports employment over investment'.