Australia's productivity growth trends: Research and findings

A low productivity growth period

Productivity growth goes in cycles and Australia is currently within the normal bounds of a low productivity growth period, rather than a crisis as commonly characterised.

KPMG's study on Australia's productivity outcomes indicates that the country's productivity alternates between enduring, albeit transient, phases of high and low growth.

The expected period of high growth regime typically extends for an estimated 8 quarters, while low productivity periods tend to last approximately 12 quarters. There are a number of key factors driving labour productivity, as well as options for policymakers to consider to help lift the country out of the current slowdown.

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Trends in Australia's productivity growth

Further research and findings

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What does Australia's productivity slowdown look like?

We should expect Australia to see a productivity rebound sometime soon

Periods of low productivity are seen to last marginally longer in Australia. However, recent data from the United States is indicating a resurgence in productivity, and given the economic parallels between the two countries, it is not unreasonable to anticipate that Australia will follow suit in the future.

Further attention should be devoted to lifting productivity growth

KPMG recommends further attention in areas such as education and training for unemployed people, migration programs and labour mobility to lift productivity growth.

A number of labour market influences affect productivity

Analysis shows that a significant portion of productivity growth in Australia can be explained by three factors: the productivity that occurred in the last quarter; the number of new workers in the labour force and how tight the labour market is.

Trends in Australia's productivity growth: Research and findings

Detailed analysis of the productivity growth performance of Australia.

Trends in Australia's productivity growth

Further research and findings

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How KPMG's Economics team can help

For KPMG’s productivity research, KPMG created a model that calculates the probability of being in each regime in a given quarter. The model is a regime-switching model that we use to study the tendency of productivity growth to move between periods.

If KPMG can help your business in any way navigate the current business environment and plan for any future developments that are facing the industry, then please contact us.