U.S. productivity growth slows in the second quarter By Reuters

U.S. productivity growth slows in the second quarter By Reuters

© Reuters. FILE PHOTO: A man wearing a protective face mask walks by 14 Wall Street in the financial district of New York, U.S., November 19, 2020. REUTERS/Shannon Stapleton

WASHINGTON (Reuters) – U.S. worker productivity growth slowed in the second quarter, the Labor Department said on Tuesday.

Nonfarm productivity, which measures hourly output per worker, increased at a 2.3% annualized rate last quarter. Data for the first quarter was revised lower to show productivity rising at a 4.3% rate instead of the previously reported 5.4% pace.

Economists polled by Reuters had expected productivity to rise at a 3.5% rate. Productivity jumped early in the pandemic before slumping in the final three months of 2020, and has since rebounded.

Economists attributed the rapid rise to the hollowing out of lower-wage industries, like leisure and hospitality, which they said tended to be less productive.

Compared to the second quarter of 2020, productivity rose at a 1.9% pace. Hours worked increased at a 5.5% rate last quarter, accelerating from a revised 4.0% growth pace in the January-March period.

Unit labor costs – the price of labor per single unit of output – rose at a 1.0% rate. They contracted at a revised 2.8% pace in the first quarter. Unit labor costs increased at a 0.1% rate from a year ago. They have also been distorted by the pandemic’s disproportionate impact on lower-wage industries.

Hourly compensation rose at a 3.3% rate last quarter. That followed a revised 1.4% growth pace in the first quarter. Compensation increased at a 2.0% rate compared to the first quarter of 2020.

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