Productivity Increases 1.6% in 2Q; 2011 Revised Upward

Nonfarm productivity rose more than expected in the second quarter as companies expanded output but only modestly increased the hours worked by their employees, data from the Labor Department showed on Wednesday.

Productivity climbed at a faster-than-expected 1.6% annual rate between April and June.

In the same report, the government also said productivity rose 0.7% last year, more than the initially estimated advance of 0.4%. In another revision, productivity declined less than initially thought in the first quarter of 2012, the Labor Department said.

The upwardly revised trend in recent productivity growth is heartening for the economy because in the long run living standards improve when workers are more productive.

Analysts polled by Reuters had expected productivity to increase at a 1.3% annual rate during the period.

Output increased at a 2.0% rate during the period, but hours worked only rose at a 0.4% rate, the department said.

The report also showed unit labor costs climbing 1.7% during the period, a faster pace than the 0.6% gain expected by economists polled by Reuters.