Productivity rises to 2.5 percent in second quarter. Good, but 'could have been better'

Productivity of American workers grew to an annualized 2.5 percent, more than most economists expected, according to data released Friday by the BLS. The increase in productivity is a good sign for the US economy.

|
Mark Lennihan/AP/File
Wall Street street sign near the New York Stock Exchange on Aug. 9, 2011. In New York. U.S. stocks are opening slightly higher Friday, Aug. 8, as investors weigh gains in productivity against worsening geopolitical concerns.

The productivity of US workers made modest gains during the second quarter of this year.

Nonfarm business sector labor productivity increased at a 2.5 percent annual rate in the second quarter, according to a report by the US Bureau of Labor Statistics (BLS), released Friday. The increase comes after a revised 4.5 percent decrease in the prior three months, which was the biggest decline since the fourth quarter of 1981. The growth was higher than the 1.6 percent economists had expected, according to a Bloomberg survey.

The number of hours US workers worked increased at a 2.7 percent annualized rate, up 2 percent from 2013, and output increased at a 5.2 percent annualized rate, up 3.2 percent from last year.

"This is a good number reflecting the second quarter rebound in overall economic growth, but it could have been better," Doug Handler, chief US economist at IHS Global Insight, said in an e-mailed statement. 

Unit labor cost, or the amount of money needed to create one unit of output, grew at a 0.6 percent annualized rate, up 1.9 percent from a year ago. The manufacturing sector had a good quarter – productivity in the industry increased at 3.6 percent in the second quarter, and the cost of manufacturing goods also fell 1.3 percent in the quarter.

"Overall, we view the rise in compensation and unit labor costs revealed in this report as a modestly positive influence on core inflation in coming months," Dean Maki, chief US economist for Barclays, said in a statement.  

Looking forward, Joshua Shapiro, chief US economist the economic consulting firm MFR, said in an e-mailed analysis that the growth seen in the second quarter might be as good as it gets. "[W]ith output unlikely to sustain the rapid pace posted in [second quarter], and payrolls expanding at a pretty solid clip, it is unlikely that we are going to see productivity growing at any more than a modest pace on a trend basis in the quarters ahead." 

As experts continue to analyze the data, the US Federal Reserve is preparing to end its bond purchasing program in October. During a June policy meeting, the Fed began detailing plans to ease the US economy off the asset purchasing policy, which has been supporting economic growth.

By mid-morning, the Dow had jumped almost a hundred points to 16,448.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Productivity rises to 2.5 percent in second quarter. Good, but 'could have been better'
Read this article in
https://www.csmonitor.com/Business/new-economy/2014/0808/Productivity-rises-to-2.5-percent-in-second-quarter.-Good-but-could-have-been-better
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe