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Trend report: Regional manufacturing productivity, hourly compensation, labor costs

Greatest decline in total hours worked occurred in U.S. manufacturing. Total manufacturing labor compensation declined in Japan, Canada, United Kingdom.  U.S. manufacturing sector improved unit labor cost competitiveness against all economies compared except Korea and the United Kingdom.

According to a report just released by the U.S. Bureau of Labor Statistics, global manufacturing productivity in 2008 decreased in almost all of the 17 geographic economies analyzed across the globe included in the report compared, in contrast to past years and periods, when most economies registered productivity increases.

Singapore (-6.6 %) and Denmark (-4.5 %) experienced the largest productivity declines in 2008. The Republic of Korea and the United States led productivity growth in 2008 with slight increases of 1.2 % each, but below the average annual increases for both countries for all the periods shown in the accompanying tables.

Manufacturing output decreased in 13 of the 17 economies in 2008. The declines ranged between -0.5% in Belgium to -5.7 % in Canada. The U.S. output decline of 2.7 % was in the middle of this range.  Among the four countries with output growth in 2008, the Korean increase of 3.1 % was the largest; however, this was less than the average annual increases in Korean manufacturing output for all previous periods shown in the accompanying tables.

For most economies, declines in 2008 manufacturing output were accompanied by declines in employment, as well as by declines in average hours worked.

In 2008 manufacturing employment decreased in 10 of the 17 economies. The United States had the largest decline in employment (-3.4 %), while Singapore had the largest increase in employment (+3.4 %). Over the 2000 to 2008 period, the United Kingdom and the United States experienced the steepest average annual declines in manufacturing employment (-3.9 and -3 %, respectively).

In 2008 average hours worked in manufacturing declined in 10 of the 17 economies and increased in 5, while France and Italy showed no change in average hours worked. Average hours worked fell 0.5 % in U.S. manufacturing.

In 2008 total manufacturing hours worked fell in 9, and increased in 8 of the 17 economies compared. The greatest decline in total hours worked, -3.9 %, occurred in U.S. manufacturing, and the largest increase, +2.7 %, was in Denmark.

This contrasts with the average annual changes over the 2000 to 2008 period, when total hours worked in manufacturing declined in most of the 17 economies. Singapore (+3.6 %) and Norway (+0.2 %) were the only two countries that experienced growth in total manufacturing hours worked over the 2000 to 2008 period.

Manufacturing hourly compensation and unit labor costs
Total labor compensation in manufacturing increased in 13 of the 17 economies in 2008. The largest increases were in Norway (+8.0 %) and Denmark (+6.3 %). U. S. compensation dropped by 1 %. Total labor compensation in manufacturing also declined in Japan, Canada, and the United Kingdom.

Hourly compensation in manufacturing increased in 2008 in all 17 economies. The largest increase was in Norway (+5.6 %), followed by Spain (+4.8 %). The U.S. increase of 3.0% in hourly compensation was below its average annual increase since 1979. The 2008 increases in hourly compensation were smaller than the average annual increases for all economies during the 1979 to 2008 period, for which the report states comparable data are available.

Expressed in national currencies, unit labor costs also increased in all 17 economies in 2008. The largest increase occurred in Denmark (+8.3 %). U.S. and Taiwanese manufacturing had the second smallest increase (+1.7 %) among the economies compared. However, for the United States this increase was larger than the average annual increases in unit labor costs between 1979 and 2008.

For most economies, the 2008 increases in unit labor costs were also larger than their average annual increases during the 1979 to 2008 period.

Movements in exchange rates are often the dominant force behind changes in comparative unit labor costs and international competitiveness. In 2008, the U.S. dollar weakened against most of the currencies being compared. The exceptions were the currencies of Korea and the United Kingdom, which depreciated against the dollar. The report states this depreciation of the U.S. dollar against most currencies continues a trend that began in 2001.

As a result of these changes in exchange rates, manufacturing unit labor costs expressed in U.S. dollars increased even more in 14 of the economies, while declining in 2 in 2008. The unit labor costs of two countries, Korea and the United Kingdom, went from increases to decreases when computed on a U.S. dollar basis.

Thus, the manufacturing sector in the United States improved its unit labor cost competitiveness in 2008 against all economies compared except Korea and the United Kingdom.

 

U.S. Bureau of Labor Statistics, VentureOutsource.com, October 2009




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