Of course, productivity has been falling for some time; it was 4.5 per cent lower in Q1 that at its peak at the end of 2007. But these latest figures are in a sense more disturbing than earlier ones. Economists had hoped during the recession and flatlining phase of the recovery that productivity had fallen because firms were hoarding labour in the hope of an upturn, and so it would rise when the recovery came and labour utilization rose. This hope now seems misplaced. We’ve got a strong recovery, now but productivity is still falling. This suggests that something else is to blame for the productivity malaise than mere labour hoarding.
Here, there are several suspects.