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Productivity figures fall by 1.2%

Published 07/04/2016

Productivity in the manufacturing industry has been virtually flat since the start of the decade
Productivity in the manufacturing industry has been virtually flat since the start of the decade

Productivity fell by 1.2% at the end of last year, figures have shown.

The Office for National Statistics said unit labour costs grew by 0.4% in the final quarter of 2015 compared with the previous three months, and by 1.3% over the year.

In the manufacturing industry, productivity has been virtually flat since the start of the decade. Output per job in 2015 was the same as in 2010, while output per hour was 0.7% lower.

In the production sector, the picture was worse, with o utput per job down 4.9% since 2010, and output per hour down 5.7%.

Only in the service sector has productivity improved since the start of the decade, with output per hour up 4.4% since 2010, and output per job up 6.5%.

Output per worker has risen 3.5% since 2010.

James Sproule, chief economist at the Institute of Directors, said: "The drop in UK productivity is not welcome, but nor is it particularly surprising given the continued strong performance in employment growth.

"More jobs are clearly a good thing for the people who get them, but much of the increase in employment in 2015 came in areas like accommodation and food services, which add little to the productivity statistics.

"The rise in wages, outpacing productivity, in the final quarter of last year is likely to help to underpin the consumer-led portion of the economic recovery. However the introduction of the national living wage, raising pay for 1.8 million workers, will very likely result in continuing poor performance in productivity in 2016."

Shadow chancellor John McDonnell said: "Latest productivity figures showing the largest quarterly fall since 2008 are deeply concerning. It comes only weeks after the Office for Budget Responsibility revised down forecasts for growth due to weak productivity expectations throughout this Parliament.

"George Osborne has been Chancellor for six years now and has made almost no progress with what may be the biggest challenge facing Britain's economy. It's about time he listened to the coalition of voices calling for more investment in infrastructure, to boost productivity, as well as addressing the skills shortage which is being reported by employers across the economy."

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