Manufacturing Productivity up a Tick

Productivity in the manufacturing sector slowed to a 0.2% increase from 5.5% in the first three months of 2012, according to the U.S. Labor Dept. Unit-labor costs also rose after declining in the first quarter.

After the 2007-09 recession, productivity surged as companies fired workers and required their remaining employees to do more with less, stated a MarketWatch report. Yet productivity has slowed over the past year and a half, suggesting the easy gains that often arise after a recession have mostly run their course.

Productivity rose just 0.7% in 2011 after revised gains of 3.1% in 2010 and 2.9% in 2009.

Sometimes a slowdown in productivity is a prelude to an increase in hiring, especially as an economy gathers steam. Companies have to add workers to keep up with rising demand. Yet the current weakness in the U.S. economy provides little evidence that hiring is about to accelerate sharply.

The U.S., for instance, has added an average of 104,000 jobs over the past three months, less than half the number of people hired late in the winter, MarketWatch analysts state, adding that economic data point to continued slow growth in the months ahead.
Overall U.S. productivity rose 1.6% in the April-to-June period, a sharp contrast to the first quarter’s revised decline of 0.5%. Economists surveyed by MarketWatch expected productivity to climb by 1.3%.

The increase in second-quarter productivity was spurred by a 2% gain in the amount of goods and services produced, and a much slower 0.4% increase in hours worked. The number of hours worked slowed considerably in the second quarter from the 3.2% increase in the first three months of the year.

Unit-labor costs slowed to a 1.7% increase from 5.6% in the first quarter. Hourly wages rose 3.3% in the second quarter, or 2.6% when adjusted for inflation.

Related Editorial:

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Intermodal Shows Strong Growth in Second Quarter
Productive at Any Speed

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