- UK productivity - output/hour has risen 1.5% in a decade
- UK unemployment, at 4.2%, is the lowest since April 1975
- UK real wages have risen by 1.1% per annum over the last four years
- Robots may be coming but it's not showing up in the data
The subject matter of this Macro Letter is broad, so I shall confine my investigation to the UK. It was, after all, one of the first countries where services became a larger percentage of GDP than manufacturing.
The crossover between manufacturing and services is estimated to have happened around 1881. When Napoleon Bonaparte described England as, 'a nation of shopkeepers,' his intention may have been derisive, but his observation was prescient. Of course, M. Bonaparte was actually quoting Adam Smith, who first coined the phrase in his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776: now, he really was prescient.
As we stare into the abyss, anticipating the huge percentage of manufacturing - and now, many services - jobs which are expected to be replaced by machines, it behoves us to begin by reviewing the accuracy with which we measure services in general.
A recent paper from the Centre for Economic and Business Research does just that for one sub-sector, although it suggests that mis-measurement of economic activity in services, always difficult to define, may be a factor in the poor productivity record of the UK. I have often described Britain as a post-industrial nation but this research, into one of the most vibrant corners of the economy, makes fascinating reading - The True Value of Creative Industries Digital Exports - CIC, CBER - March 2018.
To read the entire report, please click on the report below: