The report said labor productivity climbed by 1.3 percent in the second quarter following a revised 1.1 percent decrease in the first quarter. Unit labor costs in the first quarter were revised lower to 2.3% from a prior reading of 6.7%.
The government recently revised growth in inflation-adjusted gross domestic product to an annual average of 2% from 2012-14, down 0.3 percentage points from prior estimates.
The economy expanded at a 2.3 percent annual rate in the second quarter, after growing just 0.6 percent in the first.
Unit labour costs were previously reported to have increased at a 6.7% rate in the January-March period. The economy grew at a 2.3 percent annual pace in the period.
Economists had expected productivity to jump by 1.6% compared to the 3.1% drop that had been reported for the previous quarter.
Worker productivity in the U.S. advanced at a very modest pace during the spring, reflecting only moderate growth in the economy despite constant hiring.
Non-farm U.S. productivity didn’t meet economic analysts’ predictions for the second quarter, but they weren’t too far off either. The downward revisions suggested the economy’s growth potential could be lower than the 1.5% to 2% pace that economists have been estimating.
Productivity is one of the metrics the Federal Reserve is watching as it contemplates raising interest rates for the first time in almost a decade. For example, labor productivity was flat in 2013.
Worker productivity rose slightly in Q2, snapping the first 2-quarter streak of declines since 2006.
The obtain in productivity and efficiencies drove device cost of labor to an increase of 0.five percent in the other section, right in connection when using the 0.five percent general opinion going through from Bloomberg.
“This topic is still getting nearly no attention – particularly among presidential candidates – but there is a case to be made that the stagnation in productivity has been more damaging to the living standards of Americans than the Great Recession”, Ashworth said. Last year during this same period, productivity was up 0.3%. “It’s something to think about long term”, said Gennadiy Goldberg, an economist at TD Securities in New York.
Former Fed chairman Alan Greenspan said Monday that weak productivity is the most serious problem that confronts the U.S. Weak productivity means businesses need to employ more workers to raise production, which can add to inflation pressures.