Useful short article on productivity - and data deficiencies:

Daily Telegraph again; key point is that the method of measurement has been adjusted, not that productivity has suddenly improved:

The economy may be on a significantly better footing than previously thought after a new study of productivity suggested the UK has been cast in an unflattering light.

Britain had been thought to be around 24pc less productive than the US, but under new measurements by the OECD think tank the gap falls to 16pc.

The new study suggests that living standards in the UK are not in as much danger of falling behind those of similar economies, and is a positive sign for British competitiveness as well.

The new reading also means that the UK is more productive than Italy. The gap with France shrinks from 18.6 percentage points to 10.7 points, and that with Germany declines from 21.9 percentage points to 14 percentage points.

Productivity is typically measured as economic output per hour worked. High productivity is crucial to long-run prosperity; as more goods or services are produced by each worker every day, prices can fall and wages rise.

The key difference in the new study came in estimates of the number of hours worked.

Usually each country comes up with the best numbers it can for GDP and for hours worked, which are used by the OECD to compare between nations.

However, the UK typically makes little adjustment to the number of hours worked reported in the Labour Force Survey.

Other countries, by contrast, often make changes that reduce the total estimate. As a result the UK is left with more hours worked for the same output, making its productivity look worse.

When measured on a consistent basis, this relative overestimate of hours worked is removed and a fairer picture of productivity is generated.

“Countries making no adjustments to 'average hours worked' measures extracted from the original source appear to systematically overestimate labour input and, so, under-estimate labour productivity levels,” said the OECD report.

“The results point to a reduction in relative productivity gaps of around 10 percentage points in many countries compared to current estimates.”

It removes a significant part of the puzzle of why British productivity has lagged its neighbours’ output.

However this does not do anything to counter the data that show productivity has struggled to grow over the past decade.

“While these new results are striking, the UK’s labour productivity still lags behind many of its largest international competitors,” said Richard Heys, deputy chief economist at the ONS.

“In addition, these improved figures don’t provide any explanation for why productivity growth has been so stubbornly low since 2008. So, while this analysis significantly narrows the ‘productivity gap’, the efforts to solve the ‘productivity puzzle’ and understand the rest of the ‘gap’ will continue.”