U.S. productivity down 0.9% in second quarter

08:04, August 11, 2010      

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Productivity in the U.S. nonfarm business sector fell at an annual rate of 0.9 percent in the second quarter of 2010, the first decline in more than a year, the Labor Department reported on Tuesday.

A slowing in labor productivity, the amount of output per hour of work, would be a welcome sign for the sluggish labor market because it means companies may no longer be able to boost output without adding workers.

Productivity has posted large gains since the U.S. economy began to recover from its deepest recession since the 1930s in the second half of last year. It rose 3.9 percent in the year ended June and increased 6.3 percent in the first quarter compared with a year earlier.

Meanwhile, the country's unemployment rate remains well above nine percent as the surge in efficiency help companies produce more with fewer workers.

U.S. unemployment rate stayed flat at 9.5 percent in July, but nonfarm payroll employment declined by 131,000, further evidence of weakness in the job market, the Labor Department reported on Friday.

Productivity is considered the key ingredient needed for boosting living standards because it allows companies to pay their workers more without having to raise the price of their products, which fuels inflation.

The report also showed that employers' unit labor costs, or costs of wages and benefits for each unit of output, edged up 0.2 percent in the second quarter, the first increase since the spring of 2009.

Source: Xinhua


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