USA | Dec 10, 2020

U.S. labour productivity up 4.6% in third-quarter of 2020

/ Our Today

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…19.9% rise in manufacturing sector

There was growing labour productivity in the United States in the third quarter of 2020, based on statistics just released by America’s Bureau of Labour Statistics.

The bureau reports that non-farm business sector labour productivity inched up 4.6 per cent in the third quarter, as output rose 43.4 per cent and hours worked climbed by 37.1 per cent. According to the bureau, “the 4.6 per cent gain in productivity in the third quarter follows an increase of 10.6 per cent during the second quarter.”

Over the last four quarters, non-farm business productivity increased by 4.0 per cent, reflecting a 3.4 per cent decline in output and a 7.1 per cent drop in hours worked. Moreover, in the non-farm business sector, unit labour costs declined by 6.6 per cent in the third quarter of 2020 and increased by 4.0 per cent over the last four quarters.

As for the index levels for output and hours worked that remained below their levels in the fourth quarter of 2019, the last quarter before the pandemic of the coronavirus (COVID-19) began. Output and hours worked remained at 4.0 per cent and 7.4 per cent respectively.

This was still below their fourth-quarter 2019 levels.


In the third quarter of 2020, labor productivity for the manufacturing sector rose by 19.9 per cent, as output climbed at a 56.2 per cent annual rate. The data showed that hours worked rose at an annual rate of 30.3 per cent.

The Bureau of Labour Statistics highlighted that as of the third quarter of 2020, output remains 5.7 per cent below its fourth-quarter 2019 index level, while hours worked was 6.8 per cent lower.

Furthermore, in the durable manufacturing sector, productivity went up by 47.0 per cent, reflecting a 99.8 per cent increase in output and a 35.9 per cent rise in hours worked. This sharp increase in durable manufacturing output in the third quarter was due to motor vehicle production.

At the same time, productivity increased by 0.7 per cent in the non-durable manufacturing sector as output climbed by 22.6 per cent and hours worked went up to 21.8 per cent. In the manufacturing sector, unit labour costs declined by 12.2 per cent in the third quarter of 2020, but increased by 8.9 per cent from the same quarter a year ago.


The economy has recouped two-thirds of output lost during the coronavirus crisis, while only about 56 per cent of the 22.2 million jobs lost in March and April. A wide gap between output and employment is not unusual during recessions, with a similar trend observed during the 2007-2009 Great Recession.

Economists polled by Reuters had forecast productivity growth would be unrevised at a 4.9 per cent rate in the third quarter. The COVID-19 downturn has decimated lower-wage industries, like leisure and hospitality, which economists say tend to be less productive.

Analysts report that big businesses across industries are taking advantage of the pandemic to aggressively implement labour-saving technology noting that the there is no fundamental shift in productivity growth going forward.

However, what this means is that it will take a while to recover all the jobs lost. U.S. financial markets were little moved by the data.

Compared to the third quarter of 2019, productivity increased at a 4.0 per cent rate instead of the 4.1 per cent pace reported last month.


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