Productivity in manufacturing continues to stagnate in economies around the globe, according to new data from the International Labor Comparisons program of The Conference Board. Nearly two-thirds of the mostly advanced economies covered in the dataset saw manufacturing productivity growth slow between 2014 and 2015. More than half registered growth of less than 1 percent in 2015 and six countries even posted negative productivity growth last year.

"The manufacturing picture mirrors our generally anemic global productivity outlook," said Bart van Ark, global chief economist at The Conference Board. "While manufacturing labor productivity actually grew faster in 2015 than overall productivity in two-thirds of the countries included in the ILC data, the dismal year-over-year trends suggest manufacturing can hardly be considered a bright spot. As manufacturing is an important engine of innovation, these miniscule growth rates are indicative of the enormity of the growth challenge facing mature economies."

In the United States, manufacturing productivity improved marginally—from no growth in 2014 to 0.4 percent growth in 2015—while the Euro Area as a whole saw slightly stronger acceleration to 1.7 percent growth in 2015, up from 1.1 percent the previous year, reinforcing the cyclical recovery in many European economies. In contrast, Australia showed the sharpest decline in productivity growth (−3.5 percent) mainly due to a collapse in commodities trade.

"The rapid appreciation of the U.S. dollar has been the one silver lining and savior for global manufacturers based in Europe and the Asia-Pacific region," said Elizabeth Crofoot, senior economist with the ILC program. "In 2015, even economies with stagnant or declining labor productivity increased their competitive edge against U.S. manufacturing, as measured by dollar-denominated unit labor cost. In the United States itself, however, the strengthening dollar is compounding the impact of weak productivity growth to seriously undermine the competitive standing of American manufacturing."

In dollar terms, unit labor costs in the U.S. rose 2.2 percent in 2015. Taiwan (+0.1 percent) was the only other economy that saw ULC rise. By contrast, the appreciation of the dollar against the euro and other currencies produced major labor cost savings—and increased competitiveness versus the U.S.—throughout continental Europe, ranging from Germany's −15.3 percent decline in ULC to Norway's −19.4 percent. Even nations that saw negative productivity growth in 2015 experienced double-digit declines in relative labor costs thanks to depreciations of the local currency, including Canada (−10.8 percent ULC growth), Japan (−12.3 percent), and Australia (−13.6 percent).

Other key developments in manufacturing productivity from International Labor Comparisons:

• Gloomy U.K. picture could be darkened further by Brexit. British manufacturing productivity decelerated substantially from 3.4 percent growth in 2014 to no growth in 2015. While ULC declined 2.4 percent in dollar terms, U.K. manufacturing competitiveness deteriorated relative to all other countries except the U.S., Taiwan, Singapore, and South Korea. With nearly half of U.K. manufacturing exports destined for the rest of the E.U., boosting productivity will be crucial to staying competitive in the face of uncertainty over future trade terms and currency values. This will depend on maintaining the flow of skilled immigrants—which may well be politically untenable given the E.U. referendum result.

• A combination of declining output and increased hours worked reeled Japanese manufacturing productivity into negative territory at −1.8 percent growth in 2015, down from 1.2 percent in 2015. Elsewhere in Asia, Singapore (−1.6 percent) and South Korea (−0.4 percent) also saw productivity growth turn negative.

• Manufacturing productivity growth in Germany remains below 1.0 percent, falling slightly to 0.7 percent in 2015. France, by contrast, saw a substantial improvement to 3.5 percent growth in 2015—from 0.6 percent a year earlier—as a result of rising output coupled with a decline in hours worked.

• Ireland saw by far the strongest productivity growth, at 12.7 percent in 2015. This doubles the 2014 rate, which was already the highest in the ILC cohort. Combined with the euro's depreciation against the dollar, unit labor costs declined 24.9 percent, dramatically boosting Irish manufacturing's global competitiveness.