October 5, 1998 (The Editor’s Desk is updated each business day.)

Unit labor costs fall in broad range of countries

Unit labor costs in manufacturing, as measured in U.S. dollars, fell between 1996 and 1997 in 12 of 13 nations studied recently by the Bureau of Labor Statistics. In three-quarters of those 12 cases, costs also fell in terms of the national currency of the nation involved. Korea, Belgium, and Germany experienced the largest percent declines in factory unit labor costs in U.S. dollar terms. Korea, France, and Germany had the largest declines in terms of their national currencies.

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International manufacturing competitiveness, measured by unit costs in U.S. dollars, was affected significantly by large swings in relative exchange rates. Currency values relative to the dollar depreciated in all but one of the foreign economies, the United Kingdom. These depreciations led to unit labor costs that declined at a faster rate than in the U.S. In Korea, Belgium, Germany, and France, cost declines exceeded 15 percent, compared to 1.0 percent in the United States.

In general, unit labor costs will decline if labor productivity rises more quickly than hourly compensation. Although hourly compensation rose 3.5 percent in the United States in 1997, unit labor costs declined as output per hour grew by 4.6 percent.

These international comparisons are a product of the Foreign Labor Statistics program. For additional information, see news release USDL 98-393, "International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 1997".