LONDON (Reuters) - British workers' productivity showed a long-awaited improvement in the third quarter of this year, official data showed on Wednesday, giving some encouragement to the Bank of England as it holds interest rates at a record low.
Output per hour worked rose 0.6 percent in the third quarter compared with the previous three months, the first increase in quarterly terms since the April-June period of last year and the biggest rise in more than three years.
Compared with the third quarter of last year, output per hour rose 0.3 percent, its first increase in 2014 by that measure, the Office for National Statistics said.
British productivity has been weak since the start of the recovery as employment has outpaced rapid economic growth.
Despite the improvement in the third quarter, the ONS said productivity remains about 2 percent below its level prior to the economic downturn in 2008.
The Bank of England has forecast that productivity will recover gradually as the economic recovery builds, easing potential inflation pressures.
Unit labour costs -- a measure of how much employers must pay for a given amount of output, and a gauge of underlying inflation pressures -- rose by a quarterly 0.5 percent, reflecting a sharp increase in labour costs per hour worked, but were up only 0.2 percent in yearly terms.
The BoE has said it is unlikely to raise interest rates before there are signs that wages are starting to rise faster.
Howard Archer, an economist with IHS Global Insight, said it remained to be seen if productivity had taken a lasting hit.
"Hopefully, the recent marked overall pick-up in business investment will have positive implications for future productivity growth," he said in a note to clients.
"However, it was somewhat worrying that business investment suffered a relapse in the third quarter."
Data released by the ONS on Tuesday showed business investment fell 1.4 percent in the third quarter from the second quarter and was up by 5.2 percent year-on-year, a weaker pace of growth than previously estimated.
(Reporting by William Schomberg; Editing by Ruth Pitchford)