Labour productivity in the UK, as measured by output per hour, grew by 0.9% in the third-quarter of 2017 ended September when compared with the previous quarter, according to new data released by the Office of National Statistics (ONS). This is the largest increase in productivity since Q2 2011.

The data from ONS reports labour productivity estimates for the third-quarter 2017 for the whole economy and a range of industries, together with estimates of unit labour costs.

Labour productivity grew in both the services and manufacturing industries; services productivity grew by 1.0% on the previous quarter, and manufacturing productivity also grew by 1.0%. Financial services saw a fall of 0.5%. Meanwhile, earnings and other labour costs growth outpaced productivity growth, resulting in unit labour cost growth of 1.3% in the year to Q3 2017, the lowest unit labour cost growth since the second quarter of 2015.

The ONS report added that its third quarter figures showed productivity was 16.6% below its pre-downturn trend or 19.8% below where it was expected to be by now.

Petra Wilton, Director of Strategy at the Chartered Management Institute, commented on the ONS data, “Although today’s figures are promising, the UK continues to face a mountainous productivity challenge that is holding back our wages and quality of life.”

“The Chartered Management Institute has long warned that chronic under-investment in management and leadership skills is one of the biggest drains on UK productivity,” Wilton said, pointing that ‘poor management costs the UK economy £84 billion a year.’

“To boost productivity, employers must look to initiatives to train and develop their workforce,” Wilton said. “Initiatives such as the Apprenticeship Levy offer a key opportunity to do so, yet it is disappointing that many employers do not recognise apprenticeships as a key route for driving up productivity. Already, savvy employers who are engaging with the levy, and especially the new degree-level management programmes available, are seeing the benefits. With this in mind, the government could do far more to leverage this investment for a more productive and prosperous UK economy.”