US worker productivity falls at fastest pace since 1948

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US worker productivity falls at fastest pace since 1948

In the second quarter, U.S. worker productivity fell at its steepest pace since 1948 and growth in unit labor costs accelerated, indicating strong wage pressures will continue to help keep inflation high, the Labor Department said on Tuesday.

Nonfarm productivity, which measures hourly output per worker, fell by 2.5% from a year ago. The report showed that the second quarter declined sharply at a 4.6% annualized rate, after having declined by an upwardly revised 7.4% in the first three months of the year.

Economists polled by Reuters said that productivity would decline at a 4.7% rate in the April-June period.

The Federal Reserve's fight against inflation has become more difficult because of large shifts in the composition of the US workforce since the COVID-19 epidemic.

In the second quarter, hours worked increased at a 2.6% rate.

The unit labor costs, the price of labor per unit of output, went up at a 10.8% rate. That was followed by a 12.7% growth rate in the first quarter.

The labor costs for the unit increased at a 9.5% rate from a year ago. An acute shortage of workers is boosting wage growth. There were 10.7 million job openings at the end of June.

In the second quarter, hourly compensation increased at a 5.7% rate and a 6.7% rate compared to the second quarter of 2021.