U.S. Second-Quarter Productivity Rose at Revised 1.5% Rate

By Sarah Chaney and Ben LeubsdorfFeaturesDow Jones Newswires

U.S. worker productivity grew faster than initially estimated in the second quarter, though it has remained sluggish during the slow but sturdy economic expansion.

Nonfarm business-sector productivity, measured as the goods and services produced per hour worked, increased at a 1.5% seasonally adjusted annual rate in the second quarter, up from a 0.1% growth rate in the first quarter, the Labor Department said Thursday. Economists surveyed by The Wall Street Journal had expected a 1.4% revised second quarter growth rate from a previously reported 0.9% rate.

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Output rose at a 4% rate from the first quarter, while hours worked were up at a 2.5% pace.

Compared with a year earlier, productivity was up 1.3% in the second quarter. Productivity growth averaged 1.2% a year from 2007 through 2016.

Unit labor costs at nonfarm businesses rose at a 0.2% revised rate in the second quarter. Economists had expected a 0.4% revised growth pace. From a year earlier, unit labor costs fell 0.2%.

It's unclear whether the second-quarter pickup in productivity signals a broader, sustained shift.

Rapid productivity gains, as seen during the information technology-fueled boom of the late 1990s and early 2000s, can boost household incomes and economic growth.

Weaker productivity throughout the current economic expansion is one factor that's likely held down worker wages in the U.S. Annual wage gains have been stuck near 2.5%, even though the unemployment rate has been hovering near a 16-year low in recent months. Weak productivity gains can put pressure on business profits and makes it difficult for employers to justify wage increases.

The Labor Department's report on labor productivity and costs can be accessed at: https://www.bls.gov/news.release/prod2.nr0.htm

Write to Sarah Chaney at sarah.chaney@wsj.com and Ben Leubsdorf at ben.leubsdorf@wsj.com

(END) Dow Jones Newswires

September 07, 2017 08:45 ET (12:45 GMT)