Thursday, February 3, 2011

Productivity Continues Hot Streak

Bloomberg details (bold mine):

The productivity of U.S. workers unexpectedly increased in the fourth quarter at a faster rate as companies sought to contain costs.

The measure of employee output per hour rose at a 2.6 percent annual rate, compared with a revised 2.4 percent gain in the previous three months, figures from the Labor Department showed today in Washington. Economists projected a 2 percent advance, according to the median forecast in a Bloomberg News survey. Labor expenses fell for fifth time in six quarters.

“There is a good chance that productivity will slow further this year, as firms are increasingly forced to hire more workers to expand output,” Paul shworth, chief U.S. economist at Capital Economics Ltd. in Toronto, said in a note to clients. “That is good news for the unemployed.”

Source: BLS


  1. Is it really reasonable to expect productivity to go down just because more people are hired? If companies have been investing in productivity tools, wouldn't hiring people to use those tools result in an increase in overall productivity -- or just an increase in output?

  2. just an increase in output. productivity is the marginal output by each worker. when new hires are brought into the mix, they are usually less productive then existing workers

  3. But is this productivity the product of an increase in domestic output per domestic worker? Or, is the increase in productivity the result of replacing domestic output with foreign output?

  4. in theory it should be the increase in output per worker, which actually makes sense given the recovery in GDP without the recovery in the job market