US Productivity falls in Q2

American workers’ productivity slipped in the April-June quarter, feeding into a 12 month decline in how much people are producing for each hour worked.

Productivity fell at an annual rate of 0.5 percent in the second quarter after a 0.6 percent drop during the first three months of the year, the Labor Department said Tuesday. Over the past 12 months, productivity has dropped 0.4 percent, as labor costs and the hours worked are rising faster than the output of workers’ goods and services. Unit labor costs rose 2 percent in the second quarter, after decreasing 0.2 percent in the first quarter.

Productivity has been weak for the past five years, a thorny problem since productivity growth is the key factor supporting rising living standards and higher incomes. The decline corresponds with a U.S. economy in which overall economic growth has been sluggish while hiring has been relatively robust.

“As for the underlying trend of productivity, it is likely to remain in a soft trend in coming months as output rises at a modest pace and hours worked continue to move ahead,” said Joshua Shapiro, chief U.S. economist at the forecasting firm MFR.

The economy expanded at an annual pace of 1 percent during the first six months of the year. The growth rate is roughly half the already tepid average of the seven-year recovery from the Great Recession.

via Dispatch

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza