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Finance Dictionary and Glossary of Investment Terms
The amount of output per unit of input, such as the quantity of a product produced per hour of capital employed.
The amount of output per unit of input (labor, equipment, and capital). There are many different ways of measuring productivity. For example, in a factory productivity might be measured based on the number of hours it takes to produce a good, while in the service sector productivity might be measured based on the revenue generated by an employee divided by his/her salary.
Technically, the rate of output per unit of input. In the economy at large, productivity generally means labor productivity, or output per hour worked. Essential data on this is issued quarterly by the Bureau of Labor Statistics. The rate of productivity growth has slowed in recent decades, and this is a cause of some controversy. Some people attribute the decline the increasing proportion of the workforce in service industries, where productivity is notoriously difficult to measure. Others indict the government''s ability to measure inflation; if the government is overestimating inflation (and many economists believe it is), then it would be underestimating real (as opposed to nominal) economic growth. Thus, it would also be underestimating labor productivity.In a company, productivity can be measured by the ratio of revenue per employee, the return on assets, and at a more specific level, the number of widgets produced per hour at a given plant running with a given level of staffing, equipment, energy and other inputs.
A measure of the amount of output per unit of input.