1. UK productivity flash estimate: January to March 2019

The latest labour market statistics data and GDP first quarterly estimates indicate that output per hour – the Office for National Statistics’ (ONS) main measure of labour productivity – decreased for the third consecutive quarter by 0.2% in Quarter 1 (Jan to Mar) 2019, compared with the same quarter in the previous year.

Output per hour and output per worker

The decrease in productivity growth, output per hour, during Quarter 1 2019 compared with the same quarter a year ago, was the result of total hours worked growing faster than GDP, 2.0% and 1.8% respectively. The increase in total hours worked was driven by a 1.1% increase in average weekly hours worked by full-time workers.

In contrast, output per worker in Quarter 1 2019 increased by 0.7% compared with the same quarter in the previous year. This was somewhat faster than the no growth seen in Quarter 4 (Oct to Dec) 2018 compared with the same quarter a year ago. The increase in output per worker resulted from output growing faster than employment, at 1.8% and 1.1% respectively.

Comparing the latest quarter’s growth rates with the same period a year ago provides a better measure of the long-term trend of labour productivity growth when compared with the previous quarter’s data. Quarterly movements in labour productivity can be volatile and may not indicate the long-term trend of labour productivity growth in the UK. Growth in output per hour fell by 0.6% in Quarter 1 2019 compared with the previous quarter. This is a decrease from the 0.3% growth seen in Quarter 4 2018, compared with the previous quarter. In contrast, output per worker growth increased by 0.2% in Quarter 1 2019 compared with the previous quarter.

Figure 1 shows that output per hour growth has decreased in Quarter 1 2019 compared with the same quarter a year ago, and remains negative over the last three quarters.

Figure 1: Output per hour decreased in Quarter 1 2019 compared with the same quarter a year ago, with growth in hours outpacing growth in GDP Seasonally adjusted, Quarter 1 (Jan to Mar) 2009 to Quarter 1 (Jan to Mar) 2019 Source: Office for National Statistics Notes: Estimates of hours worked have had their sign reversed to reflect how they affect output per hour. An increase in hours worked will contribute negatively to output per hour; while a decrease in hours worked will contribute positively to output per hour. Download this chart Figure 1: Output per hour decreased in Quarter 1 2019 compared with the same quarter a year ago, with growth in hours outpacing growth in GDP Image .csv .xls

Figure 2: Output per worker increased in Quarter 1 2019 compared with the same quarter a year ago, as GDP grew faster than employment Seasonally adjusted, Quarter 1 (Jan to Mar) 2009 to Quarter 1 (Jan to Mar) 2019, UK Source: Office for National Statistics Notes: Estimates of employment have had their sign reversed to reflect how they affect output per worker. An increase in employment will contribute negatively to output per worker; while a decrease in employment will contribute positively to output per worker. Download this chart Figure 2: Output per worker increased in Quarter 1 2019 compared with the same quarter a year ago, as GDP grew faster than employment Image .csv .xls

GDP, employment and total hours worked

Both employment – which captures the total number of people in work – and total hours – which captures both changes in employment and working patterns – fell during the economic downturn, though total hours fell further reflecting a fall in the average hours of those in employment. However, as GDP fell by a larger proportion in the economic downturn than either hours or employment and has grown slowly by historical standards during the recovery, productivity growth has been subdued since the downturn and has recovered more slowly compared with previous downturns. The most recent estimate of GDP indicated that the UK economy grew by 1.8% in Quarter 1 2019, compared with the same quarter a year ago. This was alongside increases in the growth of both total hours worked and employment, over the same period, of 2% and 1.1% respectively.

Figure 3 shows these relative movements over the post-downturn period, comparing GDP, employment and total hours worked. It indicates that in Quarter 1 2019, all three economic indicators were above their pre-downturn levels, with GDP being 12.7% higher while both hours and employment were equally 10.2% higher.

Figure 3: GDP, total hours worked, and employment are all above their pre-downturn levels by at least 10% Seasonally adjusted, UK, Quarter 1 (Jan to Mar) 2008 to Quarter 1 (Jan to Mar) 2019 Source: Office for National Statistics Download this chart Figure 3: GDP, total hours worked, and employment are all above their pre-downturn levels by at least 10% Image .csv .xls

Services, construction and production made the largest contributions to GDP growth during Quarter 1 2019, compared with the same quarter a year ago, contributing 1.6%, 0.2% and 0.1% respectively. This growth in output corresponds with the growth of the UK labour market, as the number of people aged 16 years and over in employment increased by 1.1% over the same period. This growth in employment was driven by increases in both self-employed and employees, which grew by 3.8% and 0.6% respectively.

Data for the earlier quarters, Quarter 1 2008 until Quarter 4 2018, are consistent with the Labour productivity national statistics estimates.