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Productivity and Gross Value Added

Productivity and Economic Growth

Gross value added (GVA) is the value of goods and services produced in an area, industry, or sector of an economy and is used to measure the value of the economy due to the production of goods and services over time.[1]

 Key points from the latest available data (2017):

  • Herefordshire’s GVA was £3,878 million, a growth of 4.8% since 2016; the third highest annual growth of all the West Midlands local authority areas. Herefordshire’s growth was also higher than that recorded regionally and nationally (3 and 3.5% respectively).
  • Total GVA(I)[2] estimates in millions of pounds (£m) are divided by the total resident population of an area (including the economically inactive) to give GVA per head in pounds (£). GVA per head of population in Herefordshire was £20,300; also the third highest among the West Midlands local authority areas. The GVA per head of population in the West Midlands region as a whole was £22,820.  In England as a whole it was £27,950 per head.
  • Herefordshire’s GVA per head of population has increased steadily over the last ten years (by 10% in total), however this represents the lowest growth among all the West Midlands authority areas. The ten year growth rate for the West Midlands was 23% and for England it was 20% - Chart 1.
  • Excluding the negative effects of the age structure and commuting, lower productivity is primarily a result of lower value added per hour worked.  This is related to  the type of industries in the county and low earnings

Chart 1: GVA per head at current basic prices, 2017
GVA per head - trends

Source: Office for National Statistics

  •  The industries that contributed most to the local economy were ‘distribution, transport, accommodation and food[3] (19%), ‘manufacturing’[4] (17%), ‘real estate activities’ (16%) and ‘public  administration, education, and health’[5] (15%; together they made up over two thirds (66%) of all economic output (Chart 2).
  • ‘Agriculture, mining, electricity, gas, water and waste’[6] and ‘manufacturing’ are over represented in Herefordshire’s GVA compared to nationally, while  ‘financial and insurance’ and ‘information and communication’ on the other hand accounted for a markedly smaller proportion of the economy in Herefordshire than in England as a whole.
  • ‘Manufacturing’ was the fastest growing industry in Herefordshire over the last decade with over 50% growth recorded since 2008 and 5% growth since last year.

    Chart 2: Proportion of Gross Value Added by industrial sector in 2017

    GVA by Industry 2017

Source: Office for National Statistics
*2017 data are provisional

GVA(I) (Income) per head can be a useful way of comparing regions of different size, comparisons can be affected by commuting flows into or out of the region

2 Labour Productivity is a measure of the size of the input (labour) compared to the size of the output (£GVA). The most common measure is GVA per head of population, but the labour input can be measured in different ways.

3 Made up of: Wholesale and retail trade; repair of motor vehicles, transportation and storage and accommodation and food services activities

4 Made up of: Food products, beverages and tobacco, textiles, wearing apparel and leather products, wood and paper products and printing, coke and refined petroleum products, chemicals and chemical products, basic pharmaceutical products and preparations, rubber and plastic products, basic metals and metal products, computer, electronic and optical products, electrical equipment, Machinery and equipment not elsewhere classified, transport equipment, other manufacturing and repair

5 Made up of: public administration and defence; compulsory social security; education; health and social work; other community, social and personal service activities; and private households with employed persons

6 Made up of: agriculture, forestry and fishing, mining and quarrying, electricity, gas steam and air-conditioning supply and water supply, sewerage and waste management

Last updated: Tuesday, February 12, 2019