U.S. productivity increases
in second quarter; labor costs soft
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[August 09, 2017]
WASHINGTON (Reuters) - U.S. worker
productivity rose more than expected in the second quarter amid an
increase in hours, but the trend remained weak, suggesting that robust
economic growth could remain elusive.
The Labor Department said on Wednesday nonfarm productivity, which
measures hourly output per worker, increased at a 0.9 percent annualized
rate in the April-June period. First-quarter productivity was revised to
show it edging up at a 0.1 percent pace instead of being unchanged as
Compared to the second quarter of 2016, productivity increased at a 1.2
percent rate. Economists polled by Reuters had forecast productivity
increasing at a 0.7 percent pace in the second quarter.
The government also revised data going back to 2014, in line with recent
revisions to gross domestic product figures.
Those revisions showed productivity falling 0.1 percent in 2016, the
first drop since 1982. That suggests the economy's potential rate of
growth has declined.
Anemic productivity is bad news for President Donald Trump who has
pledged to boost annual economic growth to 3.0 percent through tax cuts,
infrastructure spending and a rollback of regulation.
Economists blame soft productivity on a shortage of workers as baby
boomers retire as well as the impact of rampant drug addiction in some
parts of the country. A report on Tuesday showed job openings surging to
a record 6.2 million in June.
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A production line employee works at the AMES Companies factory, the
largest wheelbarrow factory in the world, in Harrisburg,
Pennsylvania, U.S. on June 29, 2017. Picture taken on June 29, 2017.
Other economists also argue that low capital expenditure, which they say has
resulted in a sharp drop in the capital-to-labor ratio, is holding down
There is also a perception that productivity is being inaccurately measured,
especially on the information technology side. Annual economic growth has not
surpassed 3 percent or more since 2005. Gross domestic product expanded at a 2.6
percent annualized rate in the second quarter.
Hours worked increased at a rate of 2.5 percent in the April-June period after
rising at a 1.6 percent pace in the first quarter. As a result, output per
worker surged at a 3.4 percent rate, the fastest since the first quarter of
2015, after rising at a 1.8 percent pace at the start of the year.
Unit labor costs, the price of labor per single unit of output, increased at a
0.6 percent pace in the second quarter after jumping t a 5.4 percent rate in the
Compared to the second quarter of 2016, unit labor costs fell at a 0.2 percent
(Reporting by Lucia Mutikani; Editing by Paul Simao)
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