Labour productivity for the domestic sector fell by 0.1% in Q1 2023 compared with Q4 2022, the CSO has found.

Labour productivity for the foreign sector fell by 8.2%, while total economy labour productivity decreased by 3%.

There were significant reductions in labour productivity across several sectors in Q1 2023, particularly for the manufacturing, and administrative and support-services sectors.

The level of capital services in the domestic sector declined by 2.3% in Q1 2023, and foreign capital services were also down by 0.8%.

Reduced activity

Statistician Seán O’Boyle said: “Productivity across the economy fell in the first quarter of 2023. Labour productivity for the domestic sector declined by just 0.1%, while foreign-sector labour productivity declined by 8.2%.

“These falls in productivity were largely due to the transportation and storage, and professional, scientific and technical-activities sectors (domestic), and reduced activity in the manufacturing sector (foreign),” he said.

These results are the first in a new series of productivity statistics by the CSO, which will now be published quarterly.

‘Less efficient’

Labour productivity measures the amount of output per hour worked in a sector, so the fall in labour productivity in Q1 2023 indicates that the economy became less efficient compared with the previous quarter, the CSO said.

However, Ireland’s domestic sector is still highly productive compared with most other European economies, the CSO added.

In Q1 2023, there were increases in labour productivity for sectors, including financial and insurance (8.9%), accommodation and food services (12.5%), and construction (5.1%).

The decline in productivity for the total economy of 3% was driven by a 10.6% fall in labour productivity for the manufacturing sector.

Elsewhere, labour productivity for the professional, scientific, and technical sector fell by 5.3%, while administrative and support services also saw productivity decline by 6.8%.

The CSO said that labour productivity is a key indicator for the Irish economy as it is the main measure of the efficiency of the labour force.