WASHINGTON (MarketWatch) — The productivity of U.S. businesses fell at a 3% annual pace in the fourth quarter, marking the biggest decline since the start of 2014.
Weak productivity growth has been a hallmark of the nearly seven-year-old economic recovery. Productivity increased just 0.6% in 2015, less than one-third the post World War Two average.
Rising productivity is the key to a better standard of living. Companies earn more profits and can pay employees higher wages when productivity is strong. But there’s less money to go around for workers and shareholders when productivity is low.
In the fourth quarter, employees put in more time on the job but output of goods and services barely rose. Output edged up a scant 0.1% while hours worked jumped 3.3%.
Unit-labor costs, meanwhile, rose at strong 4.5% annual clip in the final three months of 2015. But the annual increase was a much more modest 2.4%.
Hourly compensation for all workers, adjusted for inflation, rose 1.1% in the fourth quarter and 2.8% for the full year.
