Productivity: what it means

How much output the economy produces for each unit of input. The ONS headline measure is output per hour worked.

Productivity measures how much is produced for each unit of work or other input. The ONS headline measure is labour productivity: output (gross value added) per hour worked. It also publishes output per worker, output per job and multi-factor productivity, which takes account of capital as well as labour.

Why it matters when checking a claim

• Which measure? Output per hour and output per worker can move differently, for example when average hours change.
• Hours come from the Labour Force Survey. Problems with the Labour Force Survey have affected the hours data, so the ONS has flagged extra uncertainty in recent productivity estimates. Check the quality notes in the bulletin.
• International comparisons need purchasing power parities and a common definition; the ONS publishes its own comparison, and the OECD publishes a harmonised series.
• Public sector productivity is a separate ONS release with its own methods.

See how UK productivity is measured.

Also searched as: labour productivity, output per hour, productivity puzzle, UK productivity

Official definitions: ONS: Labour productivity · ONS: International comparisons of productivity

Questions that use this term

• How is UK productivity measured?
• How does UK GDP compare with other countries?

Related terms

• Gross value added (GVA): The value of goods and services produced, minus the cost of the inputs used to make them. GDP is GVA plus taxes on products, minus subsidies.
• Output gap: The difference between what the economy is actually producing and an estimate of what it could produce sustainably. It cannot be measured directly.
• Labour Force Survey (LFS): The ONS household survey behind the UK's headline employment, unemployment and inactivity figures.
• Purchasing power parity (PPP): A conversion rate that reflects how much the same basket of goods costs in different countries, used to compare living standards and economy size internationally.

More inflation, prices and the economy terms: CPI (Consumer Prices Index) · CPIH · RPI (Retail Prices Index) · Core inflation · Nominal GDP · Chained volume measure · Purchasing power parity (PPP) · Bank Rate · Quantitative easing (QE) · Quantitative tightening (QT) · GDP deflator · Output gap.