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January 1984, Vol. 107, No. 1
Productivity trends in manufacturing
in the U.S. and 11 other countries
Labor productivity in manufacturing increased from about 1 to 5 percent in 1982 in the United States, Japan, and in eight of nine European countries studies. Only Canada and, marginally, Norway registered declines in output per hour. These generally favorable results occurred in a year that was, for most countries, the second or third year of economic stagnation. Manufacturing output fell in every country except Japan, Belgium, and Denmark. Therefore, with the exception of these three countries, the recorded gains in labor productivity resulted entirely from reduction in employment and hours. The United States, along with Italy Denmark, and Sweden, registered the smallest productivity gains and, next to Canada, the largest declines in output, employment, and hours.
Unit labor costs, which reflect changes in both output per hour and hourly compensation costs, declined in Japan, but rose in all other countries. The increases varied from under 1 percent in Belgium to 3 to 6 percent in West Germany,1 the Netherlands, Sweden, and the United Kingdom to 7 percent in the United States, to about 9 to 11 percent in Denmark, France, and Norway, and to more than 15 percent in Canada and Italy.2 However, when measured in U.S. dollarsto take account of relative changes in exchange ratesCanada was the only country besides the United States to show an increase.
U.S. manufacturing unit labor costs rose steeply in 1981 and 1982 relative to a trade-weighted average for the 11 rival industrial countriesthereby canceling much of the gains in comparative unit labor costs that U.S. manufacturers experienced during most of the 1970's. All of the recent increase, however, resulted from the appreciation of the U.S. dollar. Measured on a national currency basis, U.S. unit labor costs fell nearly 2 percent in 1981 relative to the other countries and remained unchanged in 1982. Measured on a dollar basis, the United States posted relative increases of more than 12 percent in both 1981 and 1982. As a result, the competitive unit labor cost position of U.S. manufacturers in 1982, on average, was about equivalent to that in 1972.
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1 The Federal Republic, including West Berlin.
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