The UK’s Office for National Statistics (ONS) released its latest Labour Productivity figures on Thursday, which reveal an all time high since the series was first recorded four years ago.
ONS labour productivity estimates cover the whole economy and a range of sub-industries, together with selected estimates of unit labour costs. Labour productivity measures the amount of real, or inflation-adjusted, economic output that is produced by a unit of labour input, which is measured in terms of workers, jobs and hours worked. This data is said to be an important indicator of economic performance and a key indicator for the Bank of England as it considers whether to increase interest rates. Labour costs make up around two-thirds of the overall cost of production of UK economic output.
During the second quarter from April to June 2015, UK Labour Productivity, as measured by output per hour, grew by 0.9%, although this was reported as some 15% below an extrapolation based on its pre-downturn trend.
Whole economy unit labour costs rose by 2.2%, compared to the same quarter in 2014, which reflects an upward shift in the costs of labour as reflected in earnings growth and wider indicators. However, manufacturing output per hour was shown to have fallen by 0.5% on the second quarter 2015, continuing the exceptionally weak trend for this series since the economic downturn.
According to the ONS report, unit labour costs, the cost to companies of employing staff, increased 2.2% in the second quarter in comparison to the same period in the previous year and the fastest rate since the fourth quarter of 2012.
In contrast with the ONS report, the BBC disclosed that two surveys from the British Chambers of Commerce (BCC) and Markit found that confidence among UK manufacturers is “low” and there is a decline in growth in both manufacturing and services, while export growth is falling and jobs are being lost.
Rob Dobson, senior economist at Markit was quoted by the BBC as saying: “Job cuts send a signal that manufacturers are becoming more cautious about the future, which may lead to a further scaling-back of production at some firms in coming months.”
Commenting on BCC’s economic survey for the third quarter, John Longworth, director general at the BCC, also stated: “The real area of concern is manufacturing.”
“Confidence is low, as growth continued to fall, and our measure of manufacturing export growth hit a six year low.
“Services growth, on the other hand, dipped only slightly and overall trends show the sector remains relatively strong and stable.”
Global uncertainty, weakened demand from China and the strength of the pound are said to have resulted in slowing economic growth, according to BCC.