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American productivity is rising after two years of struggles. Rising productivity could help fight inflation, but it could also be a sign that layoffs are a simply forcing fewer remaining workers to do the work of those who were fired. Jeffrey Bartash reports in MarketWatch:
Productivity recovered from a revised 1.3% decline in the first three months of the year, the government said Thursday. The first-quarter drop was not as steep as initially reported, however.
Over the past four quarters, productivity rose at a 1.3% clip, the first positive reading in more than two years.
More important, the cost of production slowed and pointed to easing inflation in the U.S. economy.
Key details: The amount of goods and services produced, known as output, increased at a 2.4% annual rate in three months running from April to June.
Hours worked fell at a 1.3% annual rate, largely because of cutbacks at manufacturers. Factories have scaled back production of goods because of weaker demand for big-ticket items.
Productivity is determined by the difference between output and hours worked.
Unit-labor costs rose in the second quarter at a mild 1.6% annual pace.
Unit-labor costs reflect how much a business pays an employee to produce a certain number of goods and services, say a box of chocolates or the number of cleanings at a dental office.
The increase in unit-labor costs over the past year also slowed to 2.4%, marking the lowest level since 2021. That might be a sign businesses are getting material and labor costs under control, an outcome that could lead to lower U.S. inflation.
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