The productivity of workers in the U.S. improved during the second three months of 2014, but only by an amount to return to a moderate pace that has characterized the past few years. This suggests a continuation of sluggish, slow economic growth.
Nonfarm productivity of labor or the output per each hour worked, increased at a seasonally adjust annualized rate of 2.5% for the second quarter, said the Labor Department on Friday.
The increase did not offset the decline of 4.5% during the first quarter of the year, the largest drop for a quarter since 1981.
From the same period a year earlier the productivity increased by 1.2%. That was slightly ahead of the average rate of 1% recorded during 2012 and 2013, but well off rates of 3% gains during the first 12 months of the economic recovery.
The pace of gains in productivity for the past two years has gone hand in hand with the growth of the annual economy of just over 2%.
This latest data suggests that the economy will continue to grow at that pace and not the 4% growth in the GDP that was recorded in the second three months of this year.
While the figures of productivity are consistent generally with an economy that is growing soundly, it is disappointing to some extent given the second quarter’s very solid growth, said an economist in New York.
At the same time, unit labor costs, which are a gauge of the pressures of inflation, were up at an annual rate of 0.6% in the second three months of the year, following a leap of 11.8% during the first quarter.
From the same period one year ago, labor costs per unit are up 1.91% and in line with other measure of inflation.
The productivity numbers that are up and down this year are consistent with a shrinking economy which took place during the first three months of 2014 at a 2.1% pace, prior to the boom in the second quarter.
A bright spot in the report was manufacturing productivity, which was up by 3.6% over the three-month period between April and the end of June.