Productivity Up Most in Six Years

Washington, DC, Aug. 11, 2009--U.S. productivity in the second quarter rose at its fastest pace in six years as companies slashed costs to protect profits, government data showed on Tuesday.

The Labor Department said non-farm productivity rose at a 6.4 percent annual rate, the biggest gain since the third quarter of 2003, from a revised 0.3 percent gain in the first quarter. Productivity for the January-March quarter was previously reported as a 1.6 percent gain.

Analysts had forecast productivity, which measures the hourly output per worker, rising at a 5.3 percent rate in the second quarter.

"It's good because it helps keep inflation low; labor costs are pretty benign," said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida.

"On the other hand it means you can do more with fewer people," he said.

Hours worked plunged at a 7.6 percent rate in the second quarter, the Labor Department said.

Unit labor costs fell 5.8 percent, the biggest decline since the second quarter of 2000. Analysts had expected unit labor costs to fall 2.4 percent in the second quarter.