US worker productivity rebounds in 2nd quarter after steep fall at beginning of year

Economic Indicators Associated Press

In this Friday, June 6, 2014 photo, Anthony Scharf dries a car at a car wash in Woodmere Village, Ohio. The Labor Department releases second-quarter productivity data on Friday, Aug. 8, 2014. (AP Photo/Tony Dejak) (The Associated Press)

U.S. workers were more productive in the April-June quarter and labor costs rose slightly, a sharp turnaround from grim first-quarter figures.

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The Labor Department says that productivity increased 2.5 percent at a seasonally adjusted annual rate, after plummeting 4.5 percent in the first quarter. That was the steepest drop in 31 years, and reflected a sharp 2.1 percent contraction in the economy. Economists blame most of the shrinkage on temporary factors, such as harsh weather and a cutback in stockpiling by businesses.

Productivity measures output per hour of work. Greater productivity increases living standards because it enables companies to pay their workers more without having to increase prices, which can boost inflation.

Labor costs rose just 0.6 percent, after surging 11.8 percent in the first quarter.