U.S. productivity gains come in on the weak side
WASHINGTON — U.S. workers’ productivity rose a bit more this spring than initially reported, but the gains were relatively weak and a key reason why recent economic growth has been modest.
The Labor Department said Thursday that productivity grew at a revised annual rate of 1.5 percent in the April-June quarter. That’s up from an initial estimate of a 0.9 percent increase and comes after a slight 0.1 percent rate of increase in the first quarter. Labor costs increased at just a rate of just 0.2 percent in the second quarter, a major drop-off from a 4.8 percent growth rate in the first quarter.
Productivity, the amount of output per hour of work, has been weak throughout the nine-year recovery. Many economists say this has stifled pay raises and broader economic growth.
In 2016, labor productivity declined for the first time in 34 years. Relative to 2009, productivity has been improving at annual average of roughly 1 percent. Growth is largely determined by two factors: the influx of new workers and how much gets produced for each hour worked.
On Wall Street Thursday, stock indexes finished nearly back where they started as steep losses for banks and insurance companies were balanced out by gains in health care and technology companies. Insurance companies plunged as investors weighed the prospects of big losses caused by Hurricane Irma.