WASHINGTON — The US economy may be on the cusp of a pickup in productivity that will make it more difficult for Federal Reserve policy makers to reduce unemployment.
After cooling throughout last year, worker output per hour will probably rise at around 1.5 percent, in line with its long-run trend, according to economists like Ellen Zentner and Robert Gordon. That means the lower-than-forecast payroll gains in May and April may be closer to the norm than the exception for the rest of the year as companies redouble efforts to improve efficiency.
Payrolls will grow between 80,000 and 120,000 per month, less than this year’s 165,000 average, even as the economy expands by about the same 2 percent, estimates Zentner, a senior economist at Nomura Securities International Inc. Fed chairman Ben S. Bernanke earlier this year aired his concern that hiring will subside without faster economic growth.
“As the rate of productivity normalizes, businesses won’t need to hire as many workers,” said Zentner. “The level of job growth we’ve been getting over the past few months is probably pretty normal.”
The Fed said it is expanding its program to replace short-term bonds with longer-term debt by $267 billion through the end of the year in a bid to reduce unemployment and protect the expansion.
The continuation of Operation Twist “should put downward pressure on longer-term interest rates and help to make broader financial conditions more accommodative,” the Federal Open Market Committee said Wednesday.
Employers in the United States added 69,000 workers to payrolls in May, the least in a year, lowering the average pace of job creation in 2012 to about 165,000, figures from the Labor Department show.
Zentner projected a 95,000 increase, the second-lowest in a Bloomberg News survey of 87 economists, after taking into account a rebound in productivity.
The jobless rate last month climbed to 8.2 percent from April’s 8.1 percent. It has held above 8 percent for 40 consecutive months, the longest stretch of such elevated levels in the post-World War II era.
An uptick in efficiency would mark a reversal from last year and early 2011, when companies expanded payrolls even as economic growth cooled. Worker output per hour rose 0.4 percent in the year to March, compared with an average 2.5 percent gain in the six-year expansion that ended in December 2007.
Labor costs adjusted for productivity rose 1.8 percent in 2011, the most in three years.
The slowdown in productivity and increase in expenses occurred as companies brought headcounts in line with demand, correcting over-aggressive firings during the 2007-2009 recession, said Gordon, a professor at Northwestern University who has researched the ebb and flow of US productivity.
Productivity growth will return to a trend of 1.2 percent to 1.4 percent per year, which means job creation will be slower for any given pace of economic growth in the next year or two compared with 2010 or 2011, projected Gordon, also a member of the National Bureau of Economic Research committee that determines when recessions begin and end.