US productivity drops 0.3 percent in Q2

Washington -  US non-farm business sector labour productivity decreased at a 0.3-percent annual rate during the second quarter of 2011, the second consecutive quarterly decline, the US Labour Department said Tuesday.

The department also downwardly revised productivity in the first quarter to 0.6-percent decline, rather than increasing 1.8 percent as previously reported.

The government data revealed that the gain in productivity reflects increases of 1.8 percent in output and 2.0 percent in hours worked in the April-June quarter this year, Xinhua reported.

Unit labour costs in non-farm businesses rose 2.2 percent as the increase in hourly compensation outpaced the increase of productivity.

In the second quarter, US manufacturing sector productivity fell 2.0 percent as output rose 0.6 percent and hours increased 2.6 percent. Over the last four quarters, manufacturing productivity grew 2.3 percent.

Productivity measures the amount of output per hour of work. Increases in productivity allow companies to pay workers more without being forced to boost the prices of their products, which can cause inflation.

A slowdown in productivity growth can be good in the short term when unemployment is high, if it means companies are reaching the limits on how much extra output they can get from their existing work forces. However, it is a negative sign for the economy if it persists for a long period.