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US productivity recovers after steep 1Q fall

WASHINGTON (AP) — U.S. workers were more productive in the April-June quarter and labor costs rose slightly, a sharp turnaround from grim first-quarter figures.

Anthony Scharf dries a car at a car wash in Woodmere Village, Ohio.
Anthony Scharf dries a car at a car wash in Woodmere Village, Ohio. (AP Photo/Tony Dejak)

The Labor Department says that productivity increased 2.5 percent at a seasonally adjusted annual rate, after plummeting 4.5 percent in the first quarter. That was the steepest drop in 31 years, and reflected a sharp 2.1 percent contraction in the economy. Economists blame most of the shrinkage on temporary factors, such as harsh weather and a cutback in stockpiling by businesses.

Productivity measures output per hour of work. Greater productivity increases living standards because it enables companies to pay their workers more without having to increase prices, which can boost inflation.

Labor costs rose just 0.6 percent, after surging 11.8 percent in the first quarter.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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