Services productivity worsened in 2016

Unit labour costs rose 3.9%.

Services productivity worsened in 2016, with average cost of labour per unit of output rising 3.9% amidst slow services activities.

RHB said productivity deteriorated at a more modest pace of +2.4% in 2016 compared to +3.6% in 2015, driven by efficiency gains in manufacturing. "Unit labour cost of manufacturing showed sharp improvement, falling 4.5% in 2016 after rising 5.5% the year before," it noted.

However, services activities slowed to +1% last year, after growing 3.2% in 2015.

Here's more from RHB:

Removing pharmaceutical production gains, which contribute little to the domestic economy, unit labour costs came down by 1.7% - close to the Government’s target of 2-3% per year. Meanwhile, services productivity worsened, with unit labour costs rising 3.9% in 2016.

The divergence in the two sectors reflected the ongoing reshuffling, where manufacturing continues to shed jobs, primarily in the marine and offshore sector, whilst services employment rose strongly in the other services (+20,000 persons), business services (+8,500 persons), and accommodation & food services sectors (+5,500 persons).