U.S. 2Q Productivity Revised Higher Than Expected

Politics Reuters

U.S. nonfarm productivity increased at a much faster clip than previously thought in the second quarter as businesses squeezed more output from employees, government data showed on Wednesday.

Continue Reading Below

Productivity increased at a 2.2 percent annual rate rather than 1.6 percent, the Labor Department said. Productivity, which measures hourly output per worker, fell at a 0.5 percent rate in the first three months of 2012.

Economists had expected second-quarter productivity would be raised to a 1.8 percent rate. The revision reflects an upward adjustment to the country's second-quarter economic growth estimate to a 1.7 percent pace from 1.5 percent.

Businesses emerged from the 2007-09 recession lean and are showing little urgency to ramp up hiring, relying on their existing workforces to meet production.

Output increased at a 2.4 percent rate in the second quarter instead of the previously reported 2.0 percent. Output increased at a 2.7 percent pace in the first quarter.

Productivity grew rapidly as the economy recovered from its steep downturn, peaking at a 6.8 percent growth rate in the second quarter of 2009. Gains came as companies cut costs, particularly their wage bills.

Continue Reading Below

The productivity report showed unit labor costs rose at a 1.5 percent rate in the second quarter rather than 1.7 percent. Unit labor costs accelerated at a 6.4 percent rate in the first quarter.

The revision to the growth in unit labor costs was in line with economists' expectations.