Are the Official Estimates of Productivity Growth Giving the MPC Misleading Signals?

Official estimates show that manufacturing productivity growth has stalled over the past few years, while average earnings have continued to rise. Should these developments worry the Monetary Policy Committee (MPC)? In this article, Neil Blake and Paul Robson argue that employment changes and to a lesser extent output, have been mis‐recorded. It turns out that productivity has been underestimated, with new estimates more consistent with the high average earnings growth data seen recently. Manufacturers have therefore been unnecessarily targeted by the MPC, while other evidence suggests that the service sector is the guilty party.