Productivity Rate and Its Influence to National Economy

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Before further discussion about productivity rate, I want to talk about the definition of a so called “productivity”. Productivity means an average calculation of the effectiveness of production process or it can be said as an index of a production output of the state per one employee. This index is generally applied in the analysis of present economic situations of the state. Since the Federal Reserve has paid more concentration to the trend growth and inflation level, productivity index has become more important.

Productivity has a significant role in the production performance of companies and countries. Productivity rate is a tool used to determine the productivity index. It merges both labor and capital inputs altogether. The unit price from labor component is an indicator that is used to measure pressure to salary component. It’s a positive signal if the productivity rate grows up. It means people are expecting development in the economy and at the end the national currency will get stronger. A climbing in national productivity can help people raising their living standard as their financial power hikes. Productivity growth also facilitates businesses to be more advantageous.

In the U.S., productivity value report is only available once every three months. It’s usually released around the 10th day at 08.30 a.m EST (New York time). The market’s respond to the report will be quite important, even though this report can be occasionally misguide about the actual economic situations. But still, this report is a significant component that is worthy to be closely watched by investors or traders.

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