Europe Gains on U.S. in Productivity

New York City, According to a report from New York City-based The Conference Board, productivity growth in the United States has been driven largely by retail and wholesale industries. In fact, its comprehensive study, released today, shows that more than 50% of America’s productivity growth lead over Europe is due to gains in retail and wholesale trade.

However, Europe is gaining ground.

According to The Conference Board, the transformation of U.S. retailing from a low-tech industry to a sophisticated high-technology market force has been a major factor in the acceleration of U.S. productivity growth. Retail and wholesale trade firms have reaped significant productivity gains by relying on scale and scope, with massive centralized chains and increasingly large stores growing rapidly. New information and communication technologies and the organizational changes they support have produced new and better information about customers.

But despite its slower start, Europe has enormous potential to reduce the productivity gap in these sectors. Many European firms are applying the new technologies efficiently, operational regulations are easing within many countries and competitive incentives for change are increasing as obstacles to cross-border operations diminish.

The Conference Board study reveals that labor productivity growth among U.S. retail firms jumped to 7.4% between 1995 and 2002, up from 2.6% between 1980 and 1995. Wholesale trade firms showed productivity growth of 8.5% since 1995, compared with 4.1% from 1995 to 2002.