Workers’ productivity flat
WASHINGTON — The productivity of American workers was flat in the first three months of this year, while labor costs rose at the fastest pace since the second quarter of last year.
Productivity growth was zero in the JanuaryMarch quarter after rising at a 1.8 percent annual rate in the fourth quarter, the Labor Department reported Monday. It was the weakest performance since productivity had fallen at a 0.1 percent rate in the second quarter of last year but an improvement from an initial reading of a 0.6 percent decline.
Productivity, the amount of output per hour of work, has been weak through most of the current recovery. Many analysts believe finding a way to boost productivity growth is the biggest economic challenge facing the country, but there is no consensus on the cause of the slowdown.
Labor costs rose at a 2.2 percent rate after having fallen at a 4.6 percent rate in the fourth quarter. It was the fastest gain since April-June of last year.
Since 2007, productivity increases have averaged just 1.2 percent. That’s less than half the 2.6 percent average annual gains turned in from 2000 to 2007, when the country was benefiting from increased efficiency from greater integration of computers and the internet into the workplace.
Rising productivity means increased output for each hour of work, which allows employers to boost wages without triggering higher inflation.
In another report, U.S. services companies expanded at a slightly slower pace in May compared with the previous month, a sign that modest economic growth is likely to continue, according to the Institute for Supply Management, a trade group of purchasing managers.
On Wall Street, stocks closed slightly lower. It was a quiet day that eased the market back from record highs last week.