WASHINGTON (MarketWatch) — The productivity of American firms and workers rose somewhat faster in the second quarter than originally estimated, though the long-term trend remained weak.
The government on Thursday said productivity increased at a 1.5% annual pace in the spring, up from an initial 0.9% estimate. Productivity rises when workers supply more goods and services in the same amount of time.
The upward revision stemmed entirely from workers producing more goods and services. Output was revised up to show a 4% increase instead of 3.4%, the Labor Department said Thursday.
The increase in the amount of time workers spent on the job, known as hours worked, was unchanged at 2.5%.
Since workers boosted production faster than they increased hours, unit-labor costs were little changed.
Unit-labor costs rose by a revised 0.2% vs the prior 0.6% reading. The closely follow measure reflects how much it costs a business to produce one unit of output, such as a ton of steel, a reams of paper or a carton of milk.
Business have managed to keep a lid on labor costs despite the lowest unemployment rate in 16 years and spreading reports of worker shortages in certain occupations. Unit-labor costs have actually fallen 0.2% in the past four quarters.
Yet the upward revision in the second quarter still doesn’t change the underlying weakness in productivity, the key to a higher standard of living. Although productivity has risen four straight quarters, it’s only increased 1.3% over the past year. And productivity has been increasing at a similarly meager 1.2% annual pace since an economic recovery began more than eight years ago,
By contrast, productivity rose an average of 2.6% a year from 2000 to 2007. And since World War Two productivity has risen by an average of 2.1%.
One cause of low productivity is weak business investment in new technologies or other processes that could help workers do their jobs better.
All figures reflect seasonally adjusted annual rates.
U.S. stock futures were pointing to a little changed start for the Dow Jones Industrial Average