Productivity has increased massively. What the hell does that mean

That’s true, but is definitely the pessimistic way of looking at it.

Increasing productivity numbers tend to precede increasing employment in the business cycle, since businesses will try to maximize what they can do with the current employees before they commit to hiring more. Most people also agree that the economy starts to improve just before hiring improves (again, because businesses are doing more with the current load of workers). Thus, productivity is one of the potential indicators that things are on their way up.