U.K. Productivity Rises 0.5% in First Increase for Two Years
U.K. labor productivity rose for the first time in two years in the second quarter, led by the manufacturing industry.
Productivity measured by output per hour increased 0.5 percent from the first quarter, when it was unchanged, the Office for National Statistics said in London today. That’s the first growth since the second quarter of 2011. Manufacturing productivity rose 0.7 percent and services was up 0.1 percent.
The Bank of England has said that productivity will pick up as the economy recovers, which will restrain the pace of hiring. Policy makers introduced forward guidance last month and plan to keep the key interest rate at a record low until unemployment falls to 7 percent, which they project may not happen until late 2016. Economists forecast it will reach that level sooner and investors have increased bets on a rate increase before 2016.
Today’s report also showed that unit labor costs increased 2.2 percent in the three months through June, the most since the second quarter of 2009. The increase was partly due to bonus payments being deferred to take advantage of a tax cut.
Output per worker rose 0.5 percent in the second quarter and output per job increased 0.3 percent.
In a separate release, the ONS said services output increased 0.2 percent in July from the previous month and was up 1.8 percent from a year earlier. In the quarter through July, services, which account for about three quarters of the economy, grew 0.5 percent. The biggest contributor to the monthly increase was business services and finance, followed by distribution, hotels and restaurants.
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