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International Comparisons of Manufacturing Productivity and Unit Labor Costs Trends, 2014

26 May 2015

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International Comparisons of Manufacturing Productivity & Unit Labor Costs Trends, 2014

The Conference Board International Labor Comparison (ILC) program, which provides measures of labor cost per unit of manufacturing output, or unit labor cost (ULC), in 21 mature economies, shows a mild strengthening in manufacturing competitiveness of those economies whose ULC declined at, on average, -0.7 percent in 2014 (See Table 3). This improvement in ULC in part reflects the fact that average manufacturing productivity growth in those economies has held up at 1.3 percent in 2014 relative to 1.2 percent 2013, while at the same time currencies in most mature economies, notably in the Euro Area weakened relative to the U.S. dollar in 2014. So even while hourly labor costs denominated in national currency continued to rise at roughly 2 percent in most economies, the appreciation of the US dollar against many currencies beginning in 2014 offset those labor cost increases and made manufacturing production outside the United States less expensive in US dollar terms.

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In mature economies overall, manufacturing productivity growth remained steady in 2014 at 1.3 percent, although historically this performance wasn’t that strong compared to 4.8 percent on average from 1999-2006 and 2.3 percent from 2007-2012 (See Table 1). In fact, in 2014 the productivity slowdown intensified in key economies such as South Korea and Japan. In contrast, productivity growth accelerated over 3 full percentage points in the United Kingdom, Canada, and Taiwan. In the Czech Republic and Ireland, substantial productivity losses in 2013 turned into robust gains of over 8 percentage points in 2014.  

In the United States, manufacturing productivity growth recovered from 0.7 percent in 2013 doubling to 1.4 percent in 2014, although still well below productivity rates seen prior to the 2008/2009 recession.  

For the Euro Area, manufacturing productivity growth improved marginally from 0.5 percent in 2013 to 0.9 percent in 2014, an increase which is relatively modest compared to the recovering productivity seen in U.S. manufacturing (See Table 1).

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Global Indicators