Productivity climbs modestly
WASHINGTON — The productivity of American workers rose just modestly in the spring, extending a worrisome issue that has persisted throughout this expansion.
Productivity grew at an annual rate of 0.9 percent in the April-June quarter, slightly better than a scant 0.1 percent rate of increase in the first quarter, the Labor Department reported Wednesday. Labor costs edged up at a 0.6 percent rate in the second quarter, a sharp slowdown from a 5.4 percent growth rate in the first quarter.
Productivity, the amount of output per hour of work, has been weak throughout the economic recovery, now in its ninth year. Many analysts say the issue is the biggest economic challenge facing the country.
For 2016 overall, productivity actually declined — the first fall in 34 years. Productivity last year had previously been reported as a slight increase of 0.2 percent. However, that gain evaporated as part of the government’s annual benchmark data revisions. It marked the first annual decline in productivity since a 1 percent drop in 1982.
Since 2007, annual productivity increases have averaged just 1.2 percent. That’s less than half the average annual gains of 2.6 percent logged in 2000 to 2007, when the country was benefiting from increased efficiency from computers and the internet in the workplace.
Rising productivity means increased output for each hour of work, which allows employers to boost wages without triggering higher inflation.
On Wall Street Wednesday, stocks closed slightly lower, making up much of the ground they lost earlier following a rare batch of earnings disappointments by Walt Disney and other big companies.
Consumer-focused stocks, media companies and banks accounted for much of the market decline.