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December, 1986, Vol. 109, No. 12

International trends in productivity
and unit labor costs in manufacturing

Arthur Neef

Labor productivity, as measured by output per hour, rose 4.4 percent in manufacturing in the United States in 1985. This exceeded the rates of gain recorded by Canada and 7 of 9 European countries studies—France, Italy, the United Kingdom, Denmark, the Netherlands, Norway, and Sweden. However, two major trade competitors, Japan and West Germany, along with Belgium, had larger increases.

Manufacturing output rose in each country, but the increases recorded by the United States and most of the other countries were substantially less than in the preceding year and only Canada, Japan, Denmark, and Norway had increases in both employment and aggregate hours.

Unit labor costs, which reflect changes in productivity and hourly compensation costs, rose less in the United States, at 0.6 percent, than in Canada or in the seven European countries with smaller productivity gains. Germany and Belgium, however, had about equally small increases, and unit labor costs fell in Japan. The relative value of the U.S. dollar began to fall during 1985, but on an annual average basis the U.S. dollar was up by 0.4 percent over 1984 compared with the Japanese yen, by 5 percent compared with the Canadian dollar, and by 2 to 9 percent compared with the European currencies. Consequently, when measured on a U.S. dollar basis, unit labor costs declined in Belgium, Canada, Germany, Italy, and the Netherlands, as well as in Japan. Only the three Scandinavian countries had larger increases than the United States. Measured on a national currency basis, U.S. unit labor costs fell 0.5 percent relative to a trade-weighted average of the other 11 countries; adjusted for the dollar's appreciation, U.S. relative unit labor costs rose 2.7 percent.

This excerpt is from an article published in the December 1986 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.

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