U.S. Workers' Productivity Declined 0.1% in 2nd Quarter
April 26, 2011
WASHINGTON -- Workplace productivity fell 0.1% at an annual rate during the second quarter, the government said Wednesday in a report watched closely for clues about possible interest rate moves. The Labor Department said the decline in nonfarm productivity, a key to Americans' standard of living, was the first since a 1.1% drop in the final three months of 2010. Productivity rose 1.8% from January through March. Many analysts had expected a 0.5% fall during the April-June quarter. The rate was adjusted for seasonal variations. The full text of the Labor Department's report on workplace productivity and the Commerce Department's report on business inventories is available. Despite the fourth-quarter drop, productivity rose 0.7% for all of 2010, up from 0.5% in 2009. But the gain last year was less than one-third the productivity growth rate of the 1950s and 1960s. Productivity measures output per number of hours worked. Greater efficiency means businesses can increase wages without raising prices since workers are producing more with the same amount of work. Analysts fear that the current tight labor market could lead to increased wages that, without sufficient gains in productivity, would be passed on to consumers as higher prices. Separately, the Commerce Department said U.S. business inventories rose 0.1% in June to a seasonally adjusted $997.49 billion as companies rebuilt their stocks. The June increase followed an unrevised decline of 0.1% in May to an adjusted $996.98 billion. Overall business sales in June decreased 0.5% to an adjusted $711.53 billion after rising 0.8% the month before to an adjusted $715.13 billion. Total business stocks equaled 1.40 months' sales in June, up from 1.39 months' sales in the preceding month. Most analysts had expected a slight increase in June business inventories. Companies worked to rebuild their stocks in the second quarter after liquidating during the first three months of the year, they said.
