Productivity Gains Accelerate
Labor productivity increased 3.0 percent during the third quarter of 2017, the U.S. Bureau of Labor Statistics reports, as output increased 4.1 percent and hours worked increased 1.1 percent.
The productivity increase was the largest since the third quarter of 2014, when output per hour increased 4.4 percent. (All quarterly percent changes in this release are seasonally adjusted annual rates.)
From the third quarter of 2016 to the third quarter of 2017, productivity increased 1.5 percent, reflecting a 3-percent increase in output and a 1.5-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.
It would be good if this stronger pace continued, but it’s unlikely. Labor productivity has fallen from an average of 2.6% per year in 1999–2006 to 2.4% in 2007–2014.
The economy has been growing at a lackluster rate, and the slow growth in productivity is a big reason why.
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