MNI ANALYSIS: UK Data Back OBR Bean View Prodctvty Rise A Blip

--Data Show UK Hours Worked Picked-Up In Jan 

--Supporting ex-BOE Bean View Productivity Rise A Blip

     LONDON (MNI) - The latest UK labour market data show a sharp rise in hours

worked in November through January, bolstering the view of Charles Bean, a

senior official at the Office for Budget Responsibility, that the marked

acceleration in productivity growth in the second half of 2017 was a statistical

blip.

     The labour market data published Wednesday showed total weekly hours worked

rose by 0.6% in November through January on the previous three months, after

falling 0.3% on the quarter in the fourth quarter of 2017 and dropping 0.5% in

the third quarter. The apparent surge in productivity growth, measured as output

per hour worked, now looks ephemeral.

     In an interview with MNI last week Bean, formerly a Bank of England Deputy

Governor, said that as output growth and employment growth have come in as

expected in the second half of last year he suspected "it is the hours data that

is out of line."

     --ERRATIC DATA

     Bean said that the most likely outcome was that hours worked would rebound

in coming months. This would support the OBR's view that the data were erratic

and that productivity growth had not really turned a corner. "If it (hours

worked) bounces back in the next quarter or two ... that is consistent with our

story," Bean said.

     The first set of new data following he publication of the OBR's updated

fiscal forecasts have indeed showed a rebound in hours worked. The BOE also

suspected that the apparent productivity rebound was down to questionable data. 

     Bean's successor, Deputy Governor Ben Broadbent, said at the February

Inflation Report press conference that the reported drop in participation in the

labour market in the third quarter "looked a bit spurious or at least a bit

noisy," and that this flattered productivity.

     Both the OBR, which will not have to produce its next set of forecasts

until the Autumn Budget, and the Bank, will wait to see how things develop in

coming quarters. 

     "By the time we come to the Autumn Budget we should probably have enough

information to take a view on whether it was just plain measurement error," Bean

said.

     The early data, however, suggest that his most likely scenario is on the

money.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

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