US workers’ productivity rises more slowly in Q4

Source: Xinhua | 2017-03-09

The productivity of American workers grew at a slower pace in the fourth quarter and last year recorded the smallest annual gain in five years.

The US Labor Department said yesterday that productivity grew at a 1.3 percent annual pace from October through December, down from 3.3 percent in the third quarter. For 2016, productivity eked out a 0.2 percent increase, the smallest since a 0.1 percent gain in 2011.

Labor costs, which account for changes in productivity, rose at a 1.7 percent annual pace in the fourth quarter. That’s up from a 0.7 percent increase from July through September.

The fourth-quarter numbers were flat from an original report in February.

Productivity gains have slowed in recent years for reasons economists are struggling to understand. Since 2007, productivity has grown by an average 1.2 percent a year, compared with an average 2.6 percent from 2000 through 2007 and 2.1 percent from 1947 through 2016.

Productivity measures output per hour worked. Increases are crucial for economic prosperity. When their workers are more productive, employers can afford to pay them more. And productivity gains, along with growth in the number of people working, determine how fast the economy grows.