Labor productivity in the US rose for the second consecutive quarter in late 2016 after a prolonged downward trend.

Labor productivity in the non-agricultural sector of the economy, measured as the number of goods and services produced by US workers per hour, increased by 1.3% per year in the fourth quarter. The increase came after the third quarter indicator was revised up 3.5%, compared to the previous growth estimate of 3.1%. Until the middle of last year, productivity declined for three consecutive quarters, this is the longest period of negative readings since the 1970s.

The increase in the fourth quarter was stronger than the 1% growth forecast by economists. The latest data reflected an improvement of 2.2% of output during the quarter and a smaller increase in working hours by 0.9%.

Nevertheless, for the whole of 2016, productivity increased by only 0.2% compared to 2015. This was the smallest annual increase since 2011. The average increase in productivity from 2007 to 2016 was 1.1%, which is significantly lower than the long-term rate from 1947 to 2016 at 2.1%.

The growth in productivity has been weak in recent years, because enterprises have increased the wage bill and increased the number of hours worked, but the pace of economic growth has been historically weak.

Gross domestic product, the overall production figure, advanced 1.9% in 2016, based on a quarterly change. This is in line with growth in 2015 and was slightly slower than the average pace marked with expansion, which began in mid-2009. The creation of new jobs has slightly decreased last year from 2015, but the pace of hiring remained near the levels of the past, consistently recorded in the 1990s, when economic growth was stronger.

The increase in labor productivity is one of the most important components in determining the rate of growth for workers' wages, consumer prices and the economy as a whole. A strong increase in efficiency in the late 1990s and early 2000s, when US firms opened up new advances in information technology, faded and productivity growth fell sharply over the past decade.

Some economists, however, argue that productivity can be underestimated and statistics do not capture the effects of innovation in medicine, technology and other areas.

Hourly earnings data showed acceleration at the end of last year, but remain at a low level compared to the pre-crisis rates.

Productivity is one of the factors that should be taken into account by FRS officials in determining whether the economy is strong enough to withstand an interest rate increase by the central bank.