Productivity Rate Drops in Second Quarter

U.S. workers’ productivity fell more than previously estimated in the second quarter, the Labor Department said Thursday.

Productivity fell at a 1.8% annual rate, twice the 0.9% decline previously calculated, Labor said. It was the biggest drop in almost four years.

Productivity is a measure of how much an employee produces for every hour of work.

Economists had forecast a 1.9% drop for the second quarter, Bloomberg reported.

Labor costs rose at a 1.1% rate, less than forecast.

Among manufacturers, productivity jumped at a 4.1% rate after a 1.6% increase in the first quarter.

When worker efficiency improves at a slower pace and labor becomes more expensive, companies may raise prices in order to guard their profits, contributing to more rapid inflation.