A New Perspective on Understanding Sector Productivity Drivers: The TPI Sectoral Productivity Scorecard

By Olga Menukhin and Raquel Ortega-Argilés

Why sector productivity matters

Understanding productivity is essential for driving long-term economic prosperity because it measures how efficiently economic actors turn inputs like labour, capital, and innovation into outputs. In the UK, persistent productivity stagnation since 2008 has widened disparities across sectors, regions, and firms.

A new TPI Productivity Lab’s Sector Productivity Scorecard presents an innovative approach to assessing productivity growth patterns. Built on data from the Office for National Statistics (ONS) and complementary data sources, it breaks down productivity into its underlying drivers, enabling policymakers, local authorities and businesses to identify strengths, weaknesses, and factors contributing to productivity performance.

The scorecard examines how resources, investment, skills, innovation and other aspects interact to shape productivity performance across 19 UK economic sectors defined in the Standard Industrial Classification (SIC 2007). Each sector’s performance is benchmarked against the UK median compound annual growth rate (CAGR) over 5 years by economic indicator.

Benchmarking Sectors Productivity Performance to UK Productivity Growth:

Above UK Average Growth (≥5%)

B - Mining

F - Construction

P - Education

A - Agriculture

K - Finance & Insurance

Matching UK Average Growth (±0.5%)

N - Administrative Services

M - Professional Services

Below UK Average Growth (≤-5%)

Q - Health & Social Work

G - Wholesale/Retail

C - Manufacturing

I - Hospitality

O - Public Administration

J - IT & Communication

D - Energy Supply

H - Transportation & Storage

R - Arts & Entertainment

S&T - Other Services

E - Water & Waste

L - Real Estate

What the TPI Sector Productivity Scorecard tells us

The Sector Productivity Scorecard reveals significant structural differences in productivity performance across the UK economy, for example:

• Capital-intensive sectors such as Mining (B), Manufacturing (C) and Utilities (D&E) achieve exceptionally high labour productivity, reflecting the benefits of sustained investment and automation.
• Labour-intensive Service sectors such as Agriculture (A), Hospitality (I), and Arts & Entertainment (R) remain productivity laggards, requiring innovation and workforce skills development to improve productivity health of their sectors.
• Construction (F) and Professional Services (M) sectors are near the national median in terms of productivity performance measured as output per hour. Both sectors are the backbones of the UK economy representing 6.8% and 9.3% of the UK GVA and employing 6% and 8.7% of the total workforce respectively. However, they have fundamentally different characteristics: the former is capital-heavy while the latter is knowledge-based.

Manufacturing Productivity

Focusing on the Manufacturing sector as a case study provides deeper insights. While it evidences high R&D and ‘Export Intensity’ reflecting access to international markets, which can drive scale and innovation and efficiency through competition, it also struggles with decreasing labour resources, weak capital productivity, and high costs of capital. These factors signal critical areas concerning resource allocation and overall sector’s health. Additionally, concerns about business dynamics (‘New Business Births’) and ‘Managerial Skills’ further highlight the need for targeted attention.

Together, these insights demonstrate how the scorecard serves as a valuable tool, translating complex ONS data into actionable intelligence, helping policymakers identify where capital investment, skills, or innovation support are most needed.

The structure: production function perspective

At the core of the TPI Sector Productivity Scorecard is a simple yet effective framework inspired by the economic production function. In addition to Productivity Output statistics, it groups relevant economic indicators into Direct and Indirect Inputs. This approach captures both the immediate and underlying forces that influence or explain sectoral productivity, as illustrated in the graphic below.

Direct Inputs

Direct inputs represent the tangible resources and factors directly influencing production. These are the foundational drivers:

• Labour inputs within the Employment, Skills & Wellbeing category include tangible indicators that measure the efficiency and quality of labour use.
• Capital & Investment inputs reflect the amount of investment and measure how effectively sectors invest in and use their capital stock.
  

Indirect Inputs

Indirect inputs are the softer or delayed factors that contribute to long-term productivity gains. Indicators in this driver category capture the enabling environment:

• Innovation and Technology: The ‘Innovation-Active Firms’ indicator tracks prevalence of firms engaging in innovation, while ‘New Business Births’ measures entrepreneurial dynamism and sector renewal. Additionally, ‘Managerial Skills’ reflects organisational efficiency and the ability to implement productivity-enhancing processes.
• Market exposure: Indicators such as ‘Export Intensity’ and ‘Share of Exporting Firms’ show trade exposure and measure how global engagement influences productivity through competition.
• Structural and Sustainability Dynamics: The ‘Job Intensity’ indicator captures potential for structural change and automation. In contrast, ‘Annual Change of GHG (greenhouse gas) Emissions’ measures efficiency in the sustainable use of resources, which is increasingly vital as the economy transitions to net zero. These indicators represent additional contextual measures.

How policymakers, authorities and businesses can use the TPI Sector Productivity Scorecard

The TPI Sector Productivity Scorecard has been developed as a diagnostic and decision-support tool for assessing productivity across various sectors in the UK. It focuses on productivity inputs rather than attempted to compare sectors directly, as many metrics are not comparable across different sectors. Here are some suggestions of how they can be used by various audiences.

For policymakers:

• To identify productivity bottlenecks, e.g. Is weak growth in a sector driven by underinvestment, skill shortages, or inadequate management practices?
• To track the impact of policies: Monitor how interventions from R&D tax credits to skills bootcamps translate into measurable productivity improvements at the national level.
• To support sector-based industrial strategies. While the UK’s Modern Industrial Strategy defines eight priority sectors that do not align directly with SIC classifications, the TPI Sector Productivity Scorecard provides a robust evidence base at the industry (SIC) level. This enables policymakers to trace productivity performance in the underlying industries that form the foundation of each priority sector such as manufacturing, energy, digital, and construction. It helps identify where investment or innovation support can have the greatest impact

For Local and Combined Authorities:

• To monitor sector performance and identify where local businesses lag or lead national indicators.
• To use sector productivity diagnostics to inform local industrial strategies or Investment Zones.

For Businesses and Industry Bodies:

• To benchmark sectoral performance against the UK median.
• To understand productivity drivers in their sector, whether it is capital intensity, innovation activity, management quality, or export and trade.
• To inform strategic investment decisions based on evidence from the sector.

What Can Be Monitored

Using consistent ONS data by SIC section, the scorecard enables systematic monitoring of:

• Labour productivity trends (Output per Hour, Output per Job)
• Capital investment patterns - GFCF (gross fixed capital formation), FDI (foreign direct investment)
• Innovation and R&D activity
• Skill levels and management quality
• Trade and market exposure

Each indicator contributes to a comprehensive composite view of productivity performance, revealing not just how much sectors produce, but also the underlying reasons for their productivity levels.

The Broader Value: Evidence-Based Growth Policy

All TPI Productivity Lab’s tools are developed to bridge the gap between data and decision-making. The new TPI Sector Productivity Scorecard collates and transforms complex ONS datasets into a transparent, evidence-based framework that can support industrial policy design and targeted sector support programmes. By creating a broad dataset of economic indicators from publicly available official statistics, we can track annual progress against national productivity goals. We believe that the TPI Sector Productivity Scorecard can turn static data into dynamic insights, helping UK policymakers and industry practitioners understand, manage, and accelerate the drivers of productivity growth at both sector and national levels.

The TPI Sector Productivity Scorecards for each of the 19 UK sectors (SIC 2007) and a combined overview for all sectors are available on The Productivity Lab Figshare repository.

The scorecard is also available as an interactive dashboard, and the Productivity Lab’s future blogs will focus on covering it in more detail. Access is available through the TPI Productivity Lab website: