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U.S. Productivity Continues to Rise at Faster Rate

One of the big reasons U.S. economic growth has been sluggish is that labor productivity…

  • January 3, 2019

One of the big reasons U.S. economic growth has been sluggish is that labor productivity growth flat lined in the 2000s. This put an end to the robust overall growth the economy experienced in the 1980s and 1990s.

Recently, however, that trend has turned around a bit. Productivity growth has picked up.

According to the Labor Department, labor productivity increased 2.3 percent during the third quarter of 2018, as output increased 4.1 percent and hours worked increased 1.8 percent.

From the third quarter of 2017 to the third quarter of 2018, productivity increased 1.3 percent, reflecting a 3.7-percent increase in output and a 2.3-percent increase in hours worked.

Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked by all persons, including employees, proprietors, and unpaid family workers.

Unit labor costs in the nonfarm business sector increased 0.9 percent in the third quarter of 2018, reflecting a 3.1-percent increase in hourly compensation and a 2.3-percent increase in labor productivity.

Unit labor costs also increased 0.9 percent over the last four quarters.

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