Note on productivity trends

Quarterly Bulletin 1989 Q1
Published on 01 March 1989

The 1980s have witnessed significant changes in labour productivity in the United Kingdom compared with the previous decade. These changes are most marked in figures for output per head, especially in the manufacturing sector where labour productivity has grown by 4.4% per annum on average in the 1980s compared with 2.3% for the 1970s. For the aggregate economy, the comparable figures were 2.2% and 1.8%. A note in the August 1987 Bulletin discussed these changes and made estimates of the likely changes in the underlying trend in productivity which they implied. In the light of the further strong growth in output which has occurred since, this note reappraises the evidence for an improved trend in productivity, by updating two previous studies on this subject. If a significant change in productivity performance has occurred, this is an important element in an improvement in the supply side of the economy with, in turn, implications for trade performance and inflation. The first section of this note briefly discusses some factors which may produce productivity improvements, while the second provides some evidence of a productivity improvement and its likely scale. The illustrations concentrate upon the manufacturing sector.

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