The Times - UK (2022-04-08)

38 Friday April 8 2022 | the times

Business

Productivity rose by 1.3 per cent in the
final three months of last year and is
above pre-pandemic levels.
Output per hour worked, the head-
line measure, was 2.6 per cent higher
than the 2019 average, the Office for
National Statistic said, adding that this
had remained higher than pre-Covid
levels throughout the pandemic.
Output per worker, another measure
of productivity, rose by 1.4 per cent at
the end of last year to exceed 2019 levels
for the first time since the pandemic
began. It is the third consecutive
quarter that output per worker has
increased.
The ONS said that productivity in its
final estimates published yesterday had
been revised up because of stronger
economic growth at the end of last year
than had been suggested by earlier
estimates. Output grew by 1.3 per cent

Past the pandemic

Output per hour

Output per worker

Source: ONS Index (2019 = 100)

110

105

100

95

90

85

80

105

100

95

90

85

80

75

2000 05 10 15 20

2000 05 10 15 20

Productivity on rise despite fewer

workers as technology fills the gap

Arthi Nachiappan
Economics Correspondent

between October and December, up

from an initial estimate of 1 per cent,

leaving the UK economy only 0.1 per-

centage points below its pre-pandemic

level.

Productivity measures output per

unit of work. It gauges the efficiency of

a business’s production process, while

on a national level it is a prime source of

economic growth.

Bart van Ark, professor of produc-

tivity studies at University of Manches-

ter, said that productivity had returned

to its pre-pandemic trend of slow

growth. “Output is just back at where it

was before the pandemic, but inputs are

still well below what they were before

the pandemic. We produce the same

amount of output as we did pre-pan-

demic, but we do it with fewer workers,”

he said.

Nearly 600,000 people have left the

labour market since the start of the

Covid outbreak as many older workers

retired early or stopped working

because of long-term illness, according

to ONS figures.

Van Ark said that the digital transfor-

mation that companies had been

forced to undergo during the pandemic

had led to better use of technology,

which improved productivity. “It’s not

that the workers who left the labour

market were unproductive, but we were

not using technology as well,” he said.

Total hours worked remained flat in

the final quarter of last year, despite a

million people coming off furlough.

This suggests that those who were not

furloughed worked fewer hours.

According to van Ark, the real test of

productivity growth is whether outputs

rise once the number of people in work

returns to pre-pandemic levels. “If you

bring less resources to the table to pro-

duce the same amount of output as

before, it’s not very good news,” he said.

“The good news would be that you put

the same level of input but you get

growth in output.”

Retail investors withdrew a net
£2.35 billion out of bond funds in
February after being spooked by the
surge in inflation.
The retreat from funds invested in
fixed-interest securities such as gov-
ernment and corporate bonds was one
of the largest on record, as markets
braced for higher inflation and interest
rates.
Retail investors have about £308 bil-

Wary investors rush to take billions out of bonds

lion invested in bond funds, which have

become enormously popular over the

past two decades, with low inflation and

falling interest rates bolstering returns.

Latest data from the Investment

Association showed a huge increase in

investors pulling back from bond in-

vestment, up from £344 million of net

outflows in January.

Last year the category experienced

strong net inflows, but the sudden rise

in inflation and Bank of England moves

to push up rates have rattled investors.

Growing tension between Ukraine and

Russia and the invasion on February 24

also unnerved investors, who in total

pulled a net £2.5 billion from funds of all

sorts in the month.

That made it the third worst month

for the asset management industry

since records began in 2002. The worst

was March 2020, when the pandemic

led to a record net outflow of almost

£10 billion.

UK shares took a battering, too, with

the UK All Companies category being

the worst, with net outflows of

£503 million in the month. Investors

took refuge in North American funds,

with net inflows totalling £570 million.

The shift to cheap, passively

managed funds continued. Investors

bought a net £1.3 billion of tracker

funds, boosting assets in the class to

£289 billion. Passive as a share of total

funds under management is now

19.3 per cent. Funds labelled as “res-

ponsible investment” did well, notch-

ing up net inflows of £670 million.

Patrick Hosking Financial Editor

Companies

struggle to

fill vacancies

Demand for workers is continuing to

increase but companies are being

hampered by a shortage of candidates,

research suggests.

Vacancies increased for the 14th

month in a row in March and at the

quickest rate since last September,

according to the Recruitment and

Employment Confederation and

KPMG. However, their latest survey of

400 recruitment agencies indicated

that a shortage of candidates was

restricting the ability of businesses to

grow.

Pay offered for permanent and tem-

porary staff increased last month, the

report said.

Neil Carberry, chief executive of the

confederation, said: “Starting salaries

for permanent staff are growing at a

new record pace, partially due to

demand for staff accelerating and par-

tially as firms increase pay for all staff in

the face of rising prices.”

He added that “record Covid

infection levels are also pushing up

demand for temporary workers, partic-

ularly in blue-collar and hospitality

sectors, underpinning the ability of

temps to seek higher rates”.

Claire Warnes, of KPMG, added:

“There’s no end in sight to the deep-

seated workforce challenges facing the

UK economy.

“Once again this month, job vacan-

cies are increasing while there are

simply not enough candidates in all

sectors to fill them.

“With fewer EU workers, the effects

of the pandemic, the economic impacts

of the war in Ukraine and cost-of-living

pressures, many employers will con-

tinue to struggle to hire the talent and

access the skills they need.”

O

il prices have

fallen further

after energy-

consuming

nations agreed

to release fresh reserves

and amid uncertainty

whether Europe will be able

to apply sanctions to

Russian energy exports

(Emma Powell writes).

Brent crude futures were

down $1.89, or 1.9 per cent,

at $99.18 a barrel, while US

West Texas Intermediate

crude futures were 1.45 per

cent lower at $94.75. The

falls marked fresh three-

week lows for both

benchmarks and the first

time that Brent has been

below $100 a barrel since

March 16.

Josep Borrell, the

European Union’s top

diplomat, told a Nato

meeting yesterday that new

measures including a ban

on Russian coal could be

passed this week and that

the bloc would discuss an

oil embargo during the

next. However, the coal

ban would take full effect

from mid-August, a

month later than initially

planned.

International Energy

Agency countries said that

they would release

60 million barrels, including

15 million by Japan, on top

of the 180 million

announced by the United

States for the next six

months. The US strategic

petroleum reserve, the

world’s largest, held

593.7 million barrels at the

end of last year.

Russia’s invasion of

Ukraine propelled Brent

crude to $139 last month, its

highest since 2008. It rose

6.7 per cent in March to

bring its total gain for the

year to date to 38.7 per cent,

its biggest three-month gain

since the second quarter of

2008. Brent Crude and US
      WTI are $20.90 and $20.28
      higher, respectively, since
      the start of the year.
      Prices also have been
      dampened by further

outbreaks of Covid, raising

fears that the recovery in

demand could be stymied.

Last week, Opec

countries and Russia

agreed to maintain their

existing agreement and to

increase a May production

target by 432,000 barrels

per day.

Release of

reserves

pulls down

oil price

ALAMY

International Energy Agency countries will release 60 million barrels of crude oil on top of the 180 million announced by America

North Sea

operator in

$1bn buyout

Greig Cameron

The operator of the Cambo oilfield

licence has been taken over by a North

Sea rival in a deal that could be worth

$1.5 billion.

Siccar Point Energy is being acquired

by Ithaca Energy for an initial $1.1 bil-

lion, although the sum could rise if

certain milestones are reached.

Siccar Point, based in Aberdeen, is

owned by Blue Water and Blackstone,

the private equity firms. Ithaca, which

also has its headquarters in the city, is

controlled by Delek Group, an Israeli

energy corporation.

Delek said that the transaction

formed part of a plan to increase

Ithaca’s daily production and its long-

term reserves before an initial public

offering this year. It took Ithaca private

and off the London Stock Exchange in

2017, then backed the company in a

$2 billion deal to buy Chevron’s North

Sea assets in 2019.

The Siccar Point deal gives Ithaca

stakes in large fields such as Schie-

hallion and Mariner, as well as undevel-

oped discoveries at Rosebank and

Cambo containing hundreds of mil-

lions of barrels of oil.

Alan Bruce, 40, Ithaca’s chief

executive, said that the “near-term”

development opportunities at both

Cambo and Rosebank would help to

improve the UK’s energy security, as

well as creating thousands of jobs.