UK Productivity Lower Than Most Of Major Economies

Output per hour in the UK was 16% lower than the rest of the industrialised countries of the G7 in 2012 according to the ONS. In terms of output per worker the UK was 19% behind the average for the rest.

UK output per hor and per worker fell whereas across the rest of the G7 they increased. Output per hour was 2% below the pre-recession level of 2007 and there is a 15% gap between its current level and where it would have been if it had grown at its pre-recession rate. There was a productivity gap of 5% for the rest of the G7.

OECD Growth Of 0.2% In Q3

The OECD's provisional estimates for growth in member's GDP suggest an increase of 0.2% for the third quarter of 2012. The rate is the same for the previous quarter but there was divergent change across countries. GDP growth in the UK accelerated to 1% due to the Olympics. In the US growth increased to 0.5% from 0.3%. Growth in Framnce was also up to 0.2% from 0.1%. Growth slowed down in Germany and Italy saw the fifth consecutive month of contraction. In the G7, the seven major economies, on the annual comparison the US had the highest growth rate with 2.3% and Italy the largest contraction, -2.4%.

Modest International Trade Growth In First Quarter

Most major economies experienced modest merchandise trade in the first quarter of 2012 according to data from OECD. Total imports and exports of G7 and the BRICS countries increased by 1% and 0.6% respectively. China's trade dropped off sharply with exports contracting 4.2% and imports 3.8%.

Falls In UK Productivity Levels

Productivity per worker in the UK fell relative to all G7 countries except Italy and Germany in 2010, but it was above that of Japan and similar to Canada. The productivity gap between the UK and the US is the biggest since 1994. All G7 countries have seen an increase in GDP per worker and GDP per hour between 2009 and 2010. UK productivity was lower than the G7 average on both measures. GDP per worker was lower than in France, Italy and the US (the highest in G7).

All G7 countries experienced productivity growth in GDP per hour worked in 2010. In the UK growth was the result of a combination of a fall in actual hours worked and an increase in GDP. While the UK experienced a fall in hours worked per worker between 2009 and 2010 other countries saw a reduction in total hours as a result of lower employment.

The US saw the largest growth in GDP per worker of the G7 countries. The UK previously a fast growth country saw falls similar to those in Canada, France and Germany due to employment falling more slowly than GDP.

OECD Economies Continue Expanding

The Composite Leading Indicators (CLI) for January released today (5 March 2010) from the OECD seem to show that the economic recovery and expansion that has been taking place in the OECD economies is continuing. The improvement in economic activity in the G7 is only marginally better than that for December.

The index for the OECD area increased by 0.8 points in January 2010, 11.3 points higher than January last year. The increase was evenly distributed between the 'Triads', the US, 11 points, the Euro area up 12.5 points and Japan 10.7 points. The statistics show that all G7 economies are in an expansion phase but Brazil and India and in a recovery phase, even though the 5 major Asian economies combined are expanding.

Trade Volumes Grow In G7

Exports from G7 countries grew 5% quarter-on-quarter in Q3 2009 and imports were also up by 4.1%. On a year-on-year basis exports were still significantly lower, down 17.5% as were imports, down 14.6% on last year.

The value of goods and services in OECD countries rose in Q3 2009. Exports were up by 7.8%, Q-on-Q and imports by 8.7%. On a Y-on-Y basis growth this year is again still very negative with exports down 22.1% and imports 24.7% but the overall trend suggests a bottoming out and turning point.

Monthly merchandise trade values seem to confirm the recovery. Total merchandise trade values in G7 countries have been increasing since April 2009 but remains below the levels reached during August 2008.

Continued Recovery In The OECD

Indicators from the OECD continue to point to recovery in OECD economies. The composite leading indicators (CLI) for Canada, France, Italy, Germany and the UK all suggest more expansion in the business cycle than last month. In these OECD economies the main drivers of expansion are finance and business confidence. Non-member economies are also doing better with all major non-members in the recovery phase of the business cycle.

The CLI for OECD countries increased 1 point in October 2009 which is 5.7 points higher than the same period last year and the outlook is for recovery. The UK CLI increased by 1.3 points in October which was 8.8 points higher than last year and the outlook is expansion. The Euro area increased by 1.3 points, 8.8 points higher than last year. The US CLI increased 1 point, 3.9 points higher than last year. France was 10.2 points up on last year, Germany 9.2 and Italy 12.5 points up on last year.

Among the non-members China's CLI had increased 0.2 points in October and 5.7 points on last year, India 0.2 and 4 respectively, Russia increased 1.6 points in the month but was 1.1 points lower over the year and Brazil had increased by 0.7 points in October and decreased 4.2 points since October 2008.

The outlook for the OECD economies is one of recovery and for the Euro area expansion. The economies of Canada, France, Germany and Italy are also expected to expand and G7 and Asian economies are expected to be in the recovery phase as are the major non-member economies. It should also be noted that any signs of recovery contained in the data are more concerned with recovery happening rather than any suggestion of the strength of the recovery.

Trade In Goods Is Down, Services Unchanged

The UK trade deficit in the value of goods and services grew from £3.1bn in September to £3.2bn in October. The difference was in value of the trade in goods where the deficit increased from £6.9bn in September to £7.1bn in October. The trade surplus in services was unchanged over the month at £3.9bn. Export and import prices both rose by 1.6%.

The volume of exports was up 3.8% and imports by 4.3% inOctober compared with September. There were big increases in the export by value of oil, cars, intermediate goods and semi-manufactured goods other than chemicals between October and September. Imports of chemicals, consumer goods and capital goods also increased significantly in terms of commodity value during the month. The value of exports of chemicals, cars, semi-manufactured goods and intermediate goods has also significantly increased as has the imports of cars, chemicals, intermediate goods and consumer goods over the year.

Trade in goods with EU countries showed a deficit of £3.6bn, up £0.4bn as exports rose by £0.4bn to £11.3bn and imports rose £0.8bn to £14.9bn. The deficit in trade with non-EU countries narrowed to £3.5bn from £3.8bn in September. Within the G7 countries, imports from the US went up £0.4bn and imports from Norway fell £0.2bn. There were no export movements over £0.2bn.

As the prices for both imports and exports were unchanged in October, the terms of trade remained the same as September. Over the quarter import prices increased by 1.6% and export prices by 2% giving an increase in the terms of trade. The balance on trade in oil was in deficit by £0.1bn from £0.5bn in September.

The surplus on trade in services as unchanged in October from September at £3.9bn. Exports rose to £12.9bn and imports rose to £9bn. Over the quarter the surplus widenend to £12bn from £11.4bn.

Signs Of Economic Recovery Getting Stronger

OECD statistics for July are pointing to a broad economic recovery across all of the G7 countries. France, Italy and the UK are especially encouraging as the signs are that the main indicators in these economies are higher than this time last year. Most other countries indicators are better also showing signs of recovery but still lower than last year and there are signs of a trough appearing in Brazil. There are also signs of recovery in China, India and Russia. The OECD CLI increased 1.5 points in July, 1.9 points lower than July 2008. The euro area CLI increased by 1.9 points, 1.4 points higher than a year ago.