Worker Productivity Grew Most in Six Years

Washington, DC, Sept. 2, 2009--Worker productivity, a major factor determining living standards, grew at the fastest rate in nearly six years this spring while labor costs fell by the most in nine years, as companies slashed costs to survive the recession, according to the Labor Department.

Increases in productivity can help boost living standards because companies can increase wages financed by rising output. But during the recession, companies have been using their productivity gains to bolster their bottom lines as many struggle to stay in business.

This cost-cutting helped many companies report better-than-expected second-quarter earnings despite falling sales.

The Labor Department said that productivity rose at an annual rate of 6.6 percent in the second quarter, the largest advance since the summer of 2003. Economists expected an increase of 6.4 percent.

Labor costs fell at an annual rate of 5.9 percent. That's the largest drop since the second quarter of 2000, and slightly bigger than the 5.8 percent decline estimated a month ago.

The 6.6 percent rate of increase in productivity in the second quarter compared with a 0.3 percent rise in the first quarter. It was the largest quarterly increase since a 9.7 percent jump in the third quarter of 2003.

Businesses producing more with fewer employees means that unemployed Americans continue to face a dismal job market.