Productivity ticked up last year in a handful of industries profiled by the Labor Department in a Thursday report. But the indicator has been an unexpected thorn in the side of America's economic expansion in recent years, and 2014's figures show only minimal signs of progress.
Labor productivity – which measures an industry's total output divided by the hours worked by its employees – ticked up 2.6 percent in the wholesale trade sector, 1.9 percent in retail trade and only 0.3 percent in food services and drinking places, according to the report.
But between 1987 and 2014, productivity expanded each year at an average rate of 3.1 percent in wholesale trade, 2.8 percent in retail trade and 0.4 percent in food and drinking places. That means all three sectors detailed in the latest report showed below-trend gains.
The first few months of this year didn't get off to a much better start, with overall productivity in the nonfarm business sector declining 3.1 percent from the last three months of 2014.
"Productivity growth has been stagnant since the start of this expansion in 2009, averaging just 1.0 percent, well below the growth rate seen in the 1990s (2.2 percent) and the pre-Great Recession 2000s (2.3 percent)," John Canally, chief economic strategist at LPL Financial, wrote in a research note Tuesday.
A productive workforce is able to generate more output with fewer hours worked, which in turn can help boost gross domestic product. Considering economic growth and productivity have moved in tandem over the last few years, and U.S. GDP in the first quarter budged at a meager 0.6 percent rate and at an underwhelming 2.3 percent rate in the second quarter, a modest boost in productivity could go a long way toward setting the country's economy up for a stronger second half of the year.
source: U.S News
source: U.S News
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