US productivity posts biggest ever annual drop in second quarter
Economists expected productivity would decline at a 4.7% rate in the April-June period
Check out what's clicking on FoxBusiness.com.
U.S. worker productivity in the second quarter fell at its steepest pace on an annual basis since 1948, the Labor Department said on Tuesday, while growth in unit labor costs accelerated, suggesting strong wage pressures will continue to help keep inflation elevated.
Nonfarm productivity, which measures hourly output per worker, fell at 2.5% pace from a year ago. It also declined sharply in the second quarter at a 4.6% annualized rate, after having declined by an upwardly revised 7.4% in the first three months of the year, the report showed.
Economists polled by Reuters had expected productivity would decline at a 4.7% rate in the April-June period.
Large shifts in the composition of the U.S. workforce in the wake of the COVID-19 pandemic have made it harder to measure underlying productivity growth, which some economists put at about 1.0% or less, making the Federal Reserve's fight against inflation more difficult.
FED COULD APPROVE 100-BASIS POINT INTEREST RATE HIKE AFTER JOBS SHOCKER, CITI SAYS
Workers trowel the poured mixture of a slab in the factory of IceStone, a manufacturer of recycled glass countertops and surfaces, in New York City, New York, U.S., June 3, 2021. ( REUTERS/Andrew Kelly / Reuters)
Hours worked increased at a 2.6% rate in the second quarter.
CRUISE SHIP OPERATORS ARE HARD HIT BY LABOR CRISIS, RECESSION ANXIETY
U.S. Labor Secretary Marty Walsh speaks during the daily press briefing at the White House on April 2, 2021 in Washington, D.C. (Photo by Drew Angerer/Getty Images | Andrew Harrer/Bloomberg via Getty Images / Getty Images)
Unit labor costs - the price of labor per single unit of output - rose at a 10.8% rate. That followed a 12.7% rate of growth in the first quarter.
MARKETS WILL BE IN FOR A 'RUDE AWAKENING’ FOLLOWING JOBS REPORT, ECONOMIST WARNS
The U.S. Department of Labor seal hangs on a podium outside the headquarters in Washington, D.C., U.S., on Thursday, Aug. 29, 2019. (Andrew Harrer/Bloomberg via Getty Images / Getty Images)
Unit labor costs increased at a 9.5% rate from a year ago. An acute shortage of workers is boosting wage growth. There were 10.7 million job openings at the end of June.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Hourly compensation rose at a 5.7% rate in the second quarter and at a 6.7% rate compared to the second quarter of 2021.