We use the past trend rate – roughly 1.5 per cent – as the basis for our projection of future productivity growth. But recent data on productivity have been disappointing.
It is unclear how much of this weak performance is caused by cyclical factors that will be reversed in due course, and how much represents a permanent downward shift in the trend rate of productivity growth. Adding to the uncertainty is the way the data tend to be revised over time. Remember that you calculate productivity by dividing total output by total hours worked.