Productivity up, but manufacturers struggling to maintain growth
AFTER months of concern about disappointing productivity in the UK manufacturing sector, it rose at its fastest rate for four years in the second quarter of 2015.
But the figures perhaps giving rise to greater optimism were released by the Office for National Statistics at the same time as two other surveys showed manufacturers are finding it difficult to maintain their growth.
Productivity has been identified as the main issue for the Bank of England over a decision as to whether interest rates will go up.
The ONS said output per hour rose 0.9% between April and June, the highest quarter-on-quarter rise in four years.
Unit Labour costs rose 2.2% in the same period compared to last year, the fastest rate since the fourth quarter of 2012.
However, two surveys from the British Chambers of Commerce (BCC) and Markit paint a different picture.
The BCC said growth is on the wane in manufacturing and services and manufacturing confidence, sales, prices and growth forecasts are falling away more drastically, while Markit said jobs were being cut in the sector.
Markit senior economist Rob Dobson said: “Job cuts (such as the 400 announced by JCB) send a signal that manufacturers are becoming more cautious about the future, which may lead to a further scaling-back of production at some firms in coming months.
“The ongoing malaise of the manufacturing sector will add to broader growth worries and supports dovish calls for a first rise in interest rates to be held off until industry returns to a firmer footing.”
Productivity was a key issue highlighted in a major manufacturing project undertaken by TheBusinessDesk and Squire Patton Boggs which will be revealin its results next week.
