Latest Productivity Hike Sluggish

August 9, 2002 ( - In yet another indicator that the US economy has not yet completely shrugged off what ails it, US workers' productivity increased at a sharply slower pace than at the beginning of the year.

That was the word from the US Department of Labor (DoL) who said worker output per hour in nonfarm businesses advanced by 1.1% in the second quarter, down from the upwardly revised 8.6% gain in the previous quarter. That was the weakest showing since the second quarter of 2001.

The amount of worker hours fell for a fifth straight quarter, the DoL indicated. Output rose 0.5% in the quarter, down from a 6.2% increase in the first quarter, while hours worked fell 0.7%.

Unit labor costs, a closely watched gauge of wage pressures, rose 2.4%, the first increase since the second quarter of 2001. But compared with 2001, unit labor costs were still down 2.2%, DoL researchers said.

It may not have been a rosy red picture, but the latest DoL productivity numbers bested analysts expectations. Those responding to a regular Reuters poll had called for a smaller productivity gain of 0.8%.

Revisions in earlier reports provided some insight into one of the lingering questions from the recession that began in 2001. While policymakers smiled over what they thought were strong productivity growth during the recession, the updated figures showed less robust increases.

Output per worker hour fell in the first and second quarters of 2001, instead of only the initial quarter, according to the revised numbers. Overall productivity rose 1.1% in 2001 in the new data, below the original 1.9 % pace, the DoL said.