WASHINGTON — US workers were more productive in the April-June quarter and labor costs rose slightly, a sharp turnaround from grim first-quarter figures.
The Labor Department said Friday that productivity increased 2.5 percent at a seasonally adjusted annual rate, after plummeting 4.5 percent in the first quarter. That was the steepest drop in 31 years, and reflected a sharp 2.1 percent contraction in the economy. Economists blamed most of that shrinkage on temporary factors, such as harsh weather and a cutback in stockpiling by businesses.
Productivity measures output per hour of work. Greater productivity increases living standards because it enables companies to pay their workers more without having to increase prices, which can boost inflation.
Despite the first-quarter increase, labor cost gains have been tame throughout most of the recovery. Wages for most workers have barely kept up with inflation since the recession ended.