SINGAPORE - Labour productivity rose a meagre 0.9 per cent in the first quarter compared with a year ago, the Ministry of Trade and Industry (MTI) said on Tuesday.

Still, this was its highest level since the third quarter of 2011 and was boosted mainly by productivity gains in the manufacturing sector, which posted a 8.8 per cent rise.

This was followed by wholesale and retail trade, and finance and insurance, which both had 2.6 per cent gains.

On the other hand, the accommodation and food sector posted the biggest loss of 3.5 per cent.

Labour productivity fell 3.2 per cent in information and communications, and by 2.0 per cent in business services.

The figure is calculated by dividing the total value added by the total number of workers employed.

OCBC economist Selena Ling said two components contributed to the positive growth rate.

"One is the cyclical upturn in economy, as labour productivity tends to be correlated with headline growth," she said.

She noted as well that due to many measures introduced in the Budget, including productivity schemes and the policy line that foreign manpower curbs are here to stay, "to some extent, companies have swallowed the bitter pill and realised productivity measures are needed."

But she said it was difficult at this stage to say which was the bigger driver. "You'd want to see more sustained labour productivity improvement over time, even if the economy hits a soft patch; we've only had three consecutive quarters of positive numbers(for labour productivity) so far."

Ms Ling added she expects real wages to grow, given that the inflation number is expected to be significantly lower this year and the labour market remains fairly tight.

MTI permanent secretary Ow Foong Pheng said she expects "modest improvements" for labour productivity this year.

"It is slow progress and we continue to push at economic restructuring...Manufacturing productivity over the last few quarters, if not years have been strong and we expect that to continue."