American workers' productivity slipped in the April-June quarter, feeding into a 12-month decline in how much people are producing for each hour worked.
Productivity fell at an annual rate of 0.5% in the second quarter after a 0.6% drop during the first three months of the year, the Labor Department said Tuesday. Over the last 12 months, productivity has dropped 0.4%, as labor costs and the hours worked are rising faster than the output of workers' goods and services. Unit labor costs rose 2% in the second quarter, after decreasing 0.2% in the first quarter.
Productivity has been weak for the last five years, a thorny problem because productivity growth is the key factor supporting rising living standards and higher incomes. The decline corresponds with a U.S. economy in which overall economic growth has been sluggish while hiring has been relatively robust.
The economy expanded at an annual pace of 1% during the first six months of the year. The growth rate is about half the already tepid average of the seven-year recovery from the Great Recession.