Dismal U.K. Productivity Persisted Into the First Quarter
Britain’s abysmal productivity performance continued in the first three months of 2019.
Output per hour worked fell 0.2% from a year earlier, the third decline in a row, according to Office for National Statistics data published Friday.
Weak productivity has been the scourge of the British economy since the financial crisis a decade ago, depressing wage growth and restricting how fast the economy can grow without fueling inflation. Hourly output would be around a fifth higher today had it followed its pre-crisis trend.
The ONS said the figures represent a continuation of Britain’s “productivity puzzle.” Annual productivity growth has averaged around 0.5% since the recovery compared with over 2% in the year prior to 2008, leaving Britain lagging behind most of its Group of Seven peers.
The fall in the first quarter reflected economy output growing more slowly than hours worked. Productivity in services grew 0.2% but declined 0.9% in manufacturing.
With wage growth outpacing productivity growth, unit labor cost growth remained above 2% for a sixth quarter, though the rate of increase was slower than in the fourth quarter.
©2019 Bloomberg L.P.