The labor productivity index is a relative indicator of the volume of production or products produced by one employee. The data is used as intermediate values for participation in the calculations of others indicators, but professional investors and traders pay special attention to them. The published figures serve as a leading indicator of inflation and the state of the economy.
The indicators of the indicator are correlated with the level of wages, calculating and observing their value correlations. A disproportionate increase in wages relative to productivity will accelerate inflation and significantly increase production costs. The stagnation of the indicator will cause similar phenomena in the economy, which will ultimately affect GDP.
The exceptions are the data released during the crisis – the growing unemployment will be reflected in the calculations. Mass layoffs increase labor productivity, as well as short-term efforts by businesses to offset the deficit caused by strikes.
Formula for calculating labor productivity
Overall, national productivity is calculated in each country based on its own principles, but economists try to adhere to the UN recommendations. The formula coincides with the calculation of the efficiency of working labor at the enterprise, only it is averaged on a national scale, using the actual statistical data of enterprises.
For each company in the production sector or the service market, they take the volume of output per quarter and divide all employees who have worked during this time by man-hours.
Productivity index = Production volume (in pcs)/The result is multiplied by the cost of production to understand the efficiency of productivity, the data is correlated with the national GDP.
Labor productivity in the developed countries of the world
The first place in these indicators is in the United States – the breakthrough occurred in the 2000s on the rapid development of high technologies, one conditional worker produces products for €78 thousand. It is followed by Germany and the United Kingdom, with results of € 70,890 and € 65,94. The third and fourth places are occupied by Japan and France, the productivity of one employee is estimated at € 54,179 and € 59,534.
Germany and France dominated the last decade of the XX century, before that 30 years, the first places belonged to Japan. In addition to technology, the Country of the Rising Sun was helped by corporate culture, but European countries surpassed it with a developed education system.
US business and government agencies combined all these achievements, attracting specialists, creating technology parks brought America apart from the rest of the world.
Frequency, time and format of publication of the labor productivity index
The productivity index is published only in the USA, quarterly, in the format of a percentage change to the previous value. The US Department of Employment publishes news until the 10th day of the first month of the beginning of the new quarter before the opening of trading on American exchanges at 8-30 EST/15-30 Moscow time.
The impact of the index on the Forex market
The growth of the labor productivity index is perceived by traders as a positive signal and activates purchases US Dollar. This strengthening is reflected in all national currencies, especially in the absence of "local" news.
In the absence of an economic crisis, high labor productivity negatively affects gold quotes. Investors pay attention to the discrepancy in wages when productivity decreases or stagnates, which can lead to inflation. Therefore, they can increase the share of gold in portfolios, which will cause a gradual increase in metal quotes on a significant uncorrelation of the two indicators.
The period of 1970-1990 was marked by the lowest level of productivity growth, the trend was observed in all countries of the world. Economists have called this phenomenon the "productivity paradox", but have not identified the cause of this stagnation.