Productivity Rose Less Than Forecast in Q2
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Productivity in the U.S. took a step back in the second quarter, indicating an easing in the rapid pace of efficiency gains seen in the prior three months.
Nonfarm business employee output per hour increased at a 2.3% annualized rate in the second quarter, according to Labor Department figures Aug. 10. That compared to a 4.3% rate in the first quarter and the 3.2% projected in a Bloomberg survey of economists.
Growth in productivity generally means the economy can produce more goods and services without a corresponding pickup in inflation.
Productivity increases 2.3% in Q2 2021; unit labor costs increase 1.0% (annual rates) https://t.co/Pm5169Jn06 #Productivity #BLSdata — BLS-Labor Statistics (@BLS_gov) August 10, 2021
Unit labor costs rose at a 1% rate following a 2.8% decline in the previous three months.
Productivity has risen this year as employers race to keep pace with the rapid snapback in demand with fewer workers. Persistent hiring challenges have led to a record number of job openings. In the wake of the pandemic-driven recession, U.S. gross domestic product, or the value of goods and services produced within the country, has recovered much faster than employment.
Many firms have had to raise compensation or offer incentives like hiring bonuses to attract applicants. As a result, hourly compensation growth remains robust at a 3.3% rate.
The Aug. 10 report showed output rose at an annualized 7.9% pace from the prior period, while hours worked increased at a 5.5% pace.
— With assistance from Scott Lanman.
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