Productivity is the primary driver of economic growth, improved living standards, and higher wages in the long run. It is the economic north star.
Labor productivity, or output per hour, is a critical indicator since it can fluctuate depending on government policy, management, and workforce. By improving labor productivity, an economy can produce more goods and services with the same amount of work, which generates higher incomes and profits.
What's new: Labor productivity increased 4.7% in the third quarter of 2023, its quickest pace in three years, up from 3.6% in Q2. As labor productivity improves, an economy can produce more goods and services for the same amount of work – resulting in higher incomes for workers and higher profits for businesses.