The productivity index measures the output produced for each hour of labor worked. This indicator is useful for predicting inflation and output growth. If the cost of labor increases respective to the increase of productivity, and, moreover, if the increase in production costs is unlikely, then it will not cause inflation.
It has a significant impact on the market. However it should be watched carefully because it may be misleading from time to time. For example, a reduction in the number of people employed in manufacturing during the economy stagnation leads to increased productivity. This may also occur due to strikes. Growth of the index is a good factor for the national economy and leads to the growth of the dollar.