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| Economy | |
| Productivity Slows To 1.2 Percent Rate In Q4 | |
| 2017-02-02 | |
| The productivity of American workers rose in the October-December period but at a slower pace than the previous quarter. Growth in labor costs increased. Productivity climbed at an annual rate of 1.3 percent in the fourth quarter, weaker than 3.5 percent productivity growth in the July-September period, the Labor Department reported Thursday. Labor costs rose at a 1.7 percent rate, up from a tiny 0.2 percent gain in the third quarter. For the year, productivity rose a tiny 0.2 percent. It was the worst showing in five years. Productivity has slowed significantly in recent years for reasons that are unclear.
The fourth quarter slowdown had been expected given that overall economic growth, as measured by the gross domestic product, slowed in the fourth quarter. GDP grew at an annual rate of 1.9 percent in the final three months of the year, compared to a 3.5 percent gain in the third quarter. Productivity gains have been anemic for the past decade. Since 2007, annual productivity increases have averaged just 1.1 percent. That is less than half the 2.6 percent average annual gain turned in from 2000 through 2007 when the country was benefiting from the increased efficiency from greater integration of computers and the internet into the workplace. With productivity slowing, wage gains in many industries have stalled. Federal Reserve Chair Janet Yellen has pointed to the slowdown in productivity growth as a key challenge facing the country. Analysts are hopeful that companies will put more emphasis on increasing productivity as the labor market hits full employment and the pool of available qualified workers diminishes. | |
| Posted by:Steve White |
| #2 Productivity is pretty hard to compute. For example, Govt is considered a 'product', so if, say, the Dept of Def. spends $1B using 1000 employees, its not as productive as if they spent $1B using 1010 employees. There are also problems with high quality products (say, high definition panels replacing regular panels). Then there is the problem of garbage production. When companies sell $1B of snake oil with 10 people and the next year they sell $2B with 10 people, that is a big increase in productivity. The number that is published is an estimate. |
| Posted by: lord garth 2017-02-02 18:41 |
| #1 Unexpectedly! Also unexpectedly is that the initial estimate always gets downgraded after all the data comes in. |
| Posted by: gorb 2017-02-02 16:00 |