The Labor Department reported on Tuesday that the growth in worker productivity is down in the second quarter, and labor expenses were considerably lower than initially anticipated in the first quarter.
Nonfarm productivity, which is a measure of the hourly productivity of workers, grew by 2.3 percent on an annualized basis in the last quarter. Moreover, the data in the initial quarter of the year was revised down, with productivity growing at a rate of 4.3 percent rather than the originally reported 5.4 percent.
As per Reuters economists, productivity was projected to grow at a rate of 3.5 percent. Early in the Coronavirus pandemic, the productivity spiked before plummeting in the last three months of 2020, although it has recovered since then.
The ups and downs have been linked in part to low-wage industries, including hospitality and leisure, which are reopening more rapidly in recent months. Productivity has witnessed a growth of 1.9 percent compared to the second quarter of 2020. In the last quarter, hours worked climbed by 5.5 percent, shooting up from a revised 4.0 percent gain in January-March.
Presently, the industry output is around 1.2 percent higher than pre-pandemic levels, although hours worked are still 2.8 percent lower. The increase in financial activity is not matched by the rise in the number of individuals returning to work. According to Labor Department data released on Monday, job vacancies in the United States reached a new high in June.
According to a National Federation of Independent Company poll, small businesses in the United States were less optimistic about the financial rebound in July as labor shortage was a significant concern.
Unit labor expenses or the cost of labor per unit of production increased by 1.0 percent. In the first quarter, expenses shrank by a corrected 2.8 percent. In comparison to the year before, unit labor expenses grew by 0.1 percent.
In the last quarter, hourly salary increased by 3.3 percent. It is a revised first-quarter growth rate of 1.4 percent. In comparison to the first quarter of 2020, compensation grew by 2.0 percent.