Slowing Productivity May Mean More Hiring Ahead

Washington, DC, Aug. 10, 2010--Worker productivity fell this spring for the first time in more than a year.

Productivity declined at an annual rate of 0.9% in the second quarter after growing substantially throughout 2009, the Labor Department said Tuesday. Unit labor costs edged up 0.2% in the second quarter, the first increase since the spring of 2009.

Employee output rose by large amounts during the recession. Companies slashed their payrolls and pushed unemployment up to the highest levels in more than two decades.

Slowing productivity may mean that companies will begin hiring as they attempt to grow.

Productivity for all of 2009 rose 3.5%, the best showing in six years and a reflection of companies' ability to produce more with fewer workers.

The 0.9% drop in productivity in the second quarter was the first decline since a 0.1% dip in the fourth quarter of 2008. It was the biggest fall since a 1.3% decrease in the third quarter of 2008.