U.S. productivity increases in 2019 at fastest pace in nine years

The numbers: The productivity of American workers increased in 2019 at the fastest annual pace in nine years — but slower U.S. economic growth and weak business investment suggest the gains might not last.

Productivity snapped back with a 1.4% increase in the fourth quarter after a small decline in the autumn, the government said Thursday.

The growth in productivity in 2019 accelerated to 1.7% from 1.3% in the prior year and hit the highest level since 2010.

Productivity measures the number of goods or services that workers supply each hour. When workers are more productive, they are likely to earn more money. Higher productivity also boosts profits and helps to keep inflation from getting out of hand.

What happened: Companies increased the amount of goods and services they produce, known as output, by 2.5% in the final three months of 2019. The hours workers spent on the job rose by 1.1%.
Productivity is determined by the difference between output and hours worked.

Overall productivity increased at year-end despite a 1.2% decline among manufacturers. Heavy industry cut back production and hours after exports stalled amid a trade war with China. A month-long strike at General Motors GM, -2.04%  in the fourth quarter also depressed productivity.

Unit-labor costs, meanwhile, climbed a modest 1.4% annual pace in the fourth quarter. They increased 2% for the full year.