Data from the Office for National Statistics showed the UK’s workforce productivity expanded by 0.9 per cent between July and September last year, the biggest quarterly rise since 2011.
The surge was revealed just a day after former Labour prime minister Tony Blair, a leading opponent of Brexit, claimed the decision to quit the EU was “already causing economic difficulties”.
Chancellor Philip Hammond welcomed the productivity rise yesterday.
“We’re investing in skills, housing and transport to improve productivity, which is vital for raising wages and making our economy fit for the future,” he said.
The 0.9 per cent rise in the three month period between the beginning of June and the end of September 2017 compared with falls of 0.5 per cent and 0.1 per cent in the first and second quarters of that year.
Howard Archer, chief economic adviser at the business analysts EY ITEM Club, said the indications were that productivity could grow again in the fourth quarter of last year.
He said: “A much-needed pickup in UK productivity in the third quarter as output per hour rose 0.9 per cent quarter-on-quarter, which is the best performance since the second quarter of 2011.
“However, this followed declines in both the second and first quarters, and output per hour was still up only 0.8 per cent year-on-year.
“The marked third-quarter rebound suggests that some of the first-half 2017 weakness in productivity may have been cyclical.
“Businesses may have been keen to employ given concerns over potential labour shortages and also given the low cost of labour.”
The official figures showed that the third quarter of last year was positive for both the manufacturing and the services sectors of Britain’s economy.
They both rose by 1 per cent between April and June compared to the quarter before.
On an annual basis, manufacturers recorded a 2.1 per cent rise in the third quarter in contrast to last year, with the financial services sector also growing by 4.7 per cent over the period.
The update was good news for Mr Hammond after significant downgrades to economic forecasts in the Autumn Budget due to Britain’s stubbornly low productivity growth.
The Government’s fiscal watchdog – the Office for Budget Responsibility (OBR) – slashed its productivity outlook for the next five years and made swingeing cuts to its prediction for UK economic growth.
Productivity refers to the amount of work produced either per worker or per hour worked.
Ian Brinkley, acting chief economist at the Chartered Institute of Personnel and Development (CIPD), said: “While this increase in productivity is a welcome and positive start to 2018, 0.9 per cent is still a small step at a time when giant leaps are needed.
“The UK’s productivity remains well below pre-crash levels and with Brexit around the corner, unless a more concerted effort is made to improve productivity, we won’t be in a strong enough position to compete once we leave the EU.
“Moreover, it is too early to say whether this is a sustained recovery or, as we have seen in the past, a temporary blip that ends in disappointment.”