UK productivity flash estimate: October to December 2019

• Labour productivity for Quarter 4 (Oct to Dec) 2019, as measured by output per hour, grew by 0.3%, when compared with the same quarter in the previous year.

• In Quarter 4 2019, output per worker showed no growth, compared with the same quarter in the previous year.

• The labour productivity flash publication uses the latest labour market statistics and gross domestic product (GDP) first quarterly estimate to calculate labour productivity.

Output per hour in Quarter 4 (Oct to Dec) 2019 grew by 0.3%, compared with the same quarter a year ago. This was a result of gross value added (GVA) growing faster than hours worked, at 1.1% and 0.8% respectively. GVA is a measure of the production of goods and services in the economy and is closely aligned to gross domestic product (GDP).

In Quarter 4 2019, growth in the number of people employed (1%) more than counteracted a fall of 0.2% in average actual weekly hours worked compared with the same quarter in the previous year. Total weekly hours worked therefore grew by 0.8%.

There was no growth in output per worker in Quarter 4 2019 compared with the same quarter in the previous year, as GVA and employment grew at a similar pace.

The latest growth in employment was driven by a strong increase (3.9%) in the number of people who were self-employed, along with a moderate growth (0.5%) in the number of employees, compared with the same quarter a year ago.

In 2019, there was no growth in output per hour compared with the previous year. Over the same period, output per worker grew marginally by 0.3%.

This flash estimate of UK productivity uses the first available information on output and labour inputs for the latest quarter; earlier quarters are consistent with the Labour productivity statistics. The latest flash estimate data have been added onto previous productivity statistics. These data may be revised in subsequent months. As such, the ONS releases the more detailed Labour productivity bulletin after the publication of GDP quarterly national accounts.

Figure 1 shows contributions to growth in output per hour since 2009. Productivity, as measured by output per worker, remained unchanged in Quarter 4 2019 compared with the same quarter a year ago.

Over a longer period, UK productivity growth has been relatively weak – in particular, since the onset of the economic downturn in Quarter 1 (Jan to Mar) 2008 – because GVA has grown at a more moderate pace compared with labour inputs during this period (Figure 2).

As an alternative to measuring growth relative to the same quarter a year ago, growth can also be measured relative to the previous quarter. Quarterly movements in labour productivity can be volatile and may not indicate the long-term trend of labour productivity growth in the UK. In this release we headline the latest quarter’s growth rates with the same period a year ago to allow comparison with the Labour productivity statistics.

Output per hour grew by 0.3% during Quarter 4 2019 compared with the previous quarter. This follows a slightly higher growth of 0.4% in Quarter 3 (July to Sept) 2019. During the same period, output per worker fell by 0.5%; this was in contrast to the 0.6% growth seen in Quarter 3 2019.

Historical context

Both employment – which captures the total number of people in work – and total hours – which captures both changes in employment and working patterns – fell in the course of the economic downturn, though total hours fell further reflecting a fall in the average hours of those in employment.

However, gross value added (GVA) fell by a larger proportion in the economic downturn than either hours or employment and has grown slowly by historical standards during the recovery. In consequence, productivity growth has been subdued since the downturn and has recovered more slowly compared with previous downturns.

Figure 3 shows these relative movements over the post-downturn period. It indicates that in Quarter 4 2019, all three economic indicators were above their pre-recession levels, with GVA, hours and employment being up by 13.9%, 10.0% and 10.9% respectively.

Growth in GVA during Quarter 4 2019, compared with the same quarter a year ago, was mainly driven by services, of which government and other services made the largest contribution of 0.4 percentage points. In contrast, production reduced GVA by 0.3 percentage points.

This flash estimate of UK productivity uses the first available information on output and labour input for the latest quarter, Quarter 4 (Oct to Dec) 2019. These data may be revised in subsequent months. As such, we release the more detailed Labour productivity bulletin after the publication of GDP quarterly national accounts.

This release uses gross value added (GVA) to determine growth in output for the latest quarter and uses the latest estimates from the GDP first quarterly estimate released just before this publication. Estimates of earlier quarters are consistent with the Labour productivity national statistics.

Gross domestic product (GDP) data for Quarter 4 2019 are from the GDP first quarterly estimate, UK: October to December 2019, published on 11 February 2020.

Contributions are to output gross value added (GVA) and therefore may not sum to the percentage change in average GDP. More information on how GDP and GVA are measured can be found in the Short Guide to National Accounts.

Labour market data for the same period are from the Labour market statistics – February 2020 statistical bulletin, published on 18 February 2020.

Data for the earlier quarters, Quarter 1 2008 until Quarter 3 2019, are consistent with the Labour productivity national statistics. Figure 4 shows revisions to growth rates on the quarter a year ago compared with the first flash estimates published for the corresponding period. The aim is to show the reliability of the initial flash estimates over time.

Details of the policy governing the release of new data are available from the UK Statistics Authority.