Economic Report: U.S. productivity left unchanged at 1.3% in fourth quarter

Productivity among U.S. workers and firms rose 1.3% in the fourth quarter of 2016.

WASHINGTON (MarketWatch) — The increase in productivity among American firms and workers was left unchanged at 1.3% in the fourth quarter, marking the performance in 2016 as the worst in five years.

The government’s first revision of fourth-quarter productivity showed little change in output, hours worked or labor costs.

The increase in output, or how much goods and services companies produce, was raised to 2.4% from 2.2%. Hours worked rose 1% instead of 0.9%.

Productivity increases when output rises faster than hours on the job.

Unit-labor costs advanced 1.7%, the same as the government originally reported. That reflects how much it costs a business to produce one unit of output, such as a ton of coal or a bushel of wheat.

Labor costs rose in 2016 at the fastest pace in nine years, a sign companies have to pay more to employees at a time when a shrinking pool of available workers makes good help harder to find.

In premarket trading, investors brushed off the report. The Dow Jones Industrial Average DJIA, -0.14%  was set to open slightly higher

The only significant change in the latest report was a big increase in productivity among manufacturers. The government revised the gain to 2% from 0.7%.

Also read: ADP reports blowout 298,000 jobs gain for February

As a result, the increase in the industry’s unit-labor costs rose a more manageable 2.4% instead of 3.3%.

The increase in third-quarter productivity, meanwhile, was revised down a few notches to 3.3% from 3.5%. All figures reflect seasonally adjusted annual rates.

Even with a healthy fourth-quarter boost, productivity only rose 0.2% in 2016. That’s the smallest gain since 2011 and maintains a post-recession trend of extremely weak increases in productivity.

Rising productivity is the key to a more vibrant economy: it allows companies to earn bigger profits and invest more while paying higher salaries to employees.

Productivity has averaged 1% growth per year since 2007, compared to a 2.6% rate from 2000 to 2007, and 2.2% growth since the end of World War Two.

Filed in: Top News Tags: 

You might like:

5 things to know about the IPO of Nio, AKA the ‘Chinese Tesla’ 5 things to know about the IPO of Nio, AKA the ‘Chinese Tesla’
The Tell: The ‘longest bull market’ in history? Not so fast The Tell: The ‘longest bull market’ in history? Not so fast
Key Words: No, really, Sarah Sanders just corrected an ‘alternative fact’ Key Words: No, really, Sarah Sanders just corrected an ‘alternative fact’
Currencies: Turkish lira rebounds for a second session in a row Currencies: Turkish lira rebounds for a second session in a row
New ETF allows you to invest in up-and-coming Chinese biotech companies New ETF allows you to invest in up-and-coming Chinese biotech companies
The Wall Street Journal: Turkey raises tariffs on U.S. products as dispute escalates The Wall Street Journal: Turkey raises tariffs on U.S. products as dispute escalates
London Markets: U.K. stocks notch longest losing streak since February London Markets: U.K. stocks notch longest losing streak since February
‘Crazy Rich Asians’ actors hope film’s success will open more doors for Asian-Americans ‘Crazy Rich Asians’ actors hope film’s success will open more doors for Asian-Americans

Leave a Reply

Submit Comment
© 2018 Stock Investors News. All rights reserved. XHTML / CSS Valid.