The resurgence in productivity growth is mainly a cyclical response to the tightness of the labour market rather than a sign that the AI revolution is already bearing fruit. Nevertheless, that still implies scope for productivity growth to remain relatively strong, and we suspect it will end up stabilising around the 1.5%-2.0% trend that had emerged immediately before the pandemic. With faster productivity growth having played an important role in allowing inflation to ease, even as demand growth reaccelerated, this implies that inflation can be sustained at the 2% target.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services