Labour productivity (measured as output per hour) fell by 1.2% in the final quarter of 2015, according to latest figures by Office for National Statistics (ONS).

By contrast, both worker and job output were unchanged in the end quarter of 2015. Based on all 3 measures, productivity was half a per cent higher in quarter 2015 than in 2014.

ONS also found:

• output per hour in services fell by 0.7% on the previous quarter but was 1.1% higher the year earlier
• output per hour in manufacturing fell by 2.0% on previous quarter and was 3.4% lower than a year earlier
• unit labour costs were 0.4% higher in Q4 and 1.3% higher than the same quarter last year
• unit wage costs in manufacturing grew by 0.4% on previous quarter and by 3.6% compared with Q4 in 2014.

James Sproule, chief economist at the Institute of Directors, said:

“The rise in wages, outpacing productivity, in the final quarter of last year is likely to help to underpin the consumer-led portion of the economic recovery. However the introduction of the national living wage, raising pay for 1.8 million workers, will very likely result in continuing poor performance in productivity in 2016.

“We are facing a period of dynamic economic and social change, and businesses changing are critical to our being able to cope and thrive in this environment.”