The US Commerce Department reported that the productivity of American workers slackened in the first quarter of 1998 to an annual rate of 1.1 percent. Over the same period last year, productivity growth measured 1.4 percent. However, the current productivity figure is significantly lower when compared with the 1.8 percent annual average for the years 1996 and 1997.
Productivity growth is an important measure of an economy s well being.
It is a vital component of our standard of living. Strong productivity growth reduces inflationary pressures and stimulates economic growth. An employer, for example, can raise workers wages while holding prices, with the potential of increasing sales. The decline in productivity growth was concentrated in the manufacturing sector. Productivity growth was .7 percent, the lowest rate in 4 years and a fraction of the 4.6 percent growth in 1996 1997.