Worker Productivity On the Rise, DoL Study Says

The study results, as well as shrinking unemployment, are tied to increasing demand.
Iris DorbianAugust 8, 2014
Worker Productivity On the Rise, DoL Study Says

In yet another sign that the economy is recovering and the labor market is gaining strength, the Labor Department issued a report today showing that U.S. worker productivity rose in the second quarter, beating previous estimates.

Labour PaintingProductivity increased at a 2.5% annualized rate, after a revised 4.5% decrease in the prior three months that was the biggest since 1981, the study report said.

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The positive news comes a month after July’s favorable jobs report, which revealed that employers added more than 200,000 workers to payrolls for a sixth straight month, the first time that’s happened since 1997. The unemployment rate dropped to 6.2%.

“As businesses see improvement in demand, they are more likely to increase hiring to keep up with orders,” Russell Price, a senior economist at Ameriprise Financial, told Bloomberg. “The gains in labor costs are still subtle and very early. It’s premature to worry about labor costs overheating.”

The second-quarter productivity estimate was in line with the average of 2.2% from 2000 to 2012, Bloomberg noted. It also matched the average growth rate from July through December of 2013, which Bloomberg said was the strongest six-month performance in ten years.

In an earlier Bloomberg survey of 57 economists, the median forecast was for 1.6% productivity growth in the second quarter. The projection for expenses per worker inched up 0.6%, which was less than has been estimated.

Photo: Wikipedia. Detail from the painting Labour by Charles Sprague Pearce (1851–1914). Photographed by Carol Highsmith.

Source: Productivity Rises More Than Forecast, Limiting U.S. Costs