Productivity Falls 1.7 Percent, Its Biggest Decline Since 1981
Business productivity in the second quarter deteriorated at a rate unequalled since 1981, the government reported yesterday, prompting some analysts to predict major troubles ahead for the economy's competitive vigor.</br></br>The efficiency of nonfarm businesses in producing goods and services declined 1.7 percent in April through June, its first decrease since 1986 and the biggest decline since 1981, the Labor Department's Bureau of Labor Statistics said.</br></br>Productivity had risen at an annual rate of 3.4 percent in the first three months of 1988, and had been improving at a rate of 1 percent to 2 percent annually in the previous three years.</br></br>Reflecting the strong economic expansion, output of goods and services by those businesses responsible for three-fourths of U.S. economic activity rose 4.7 percent in the second quarter.</br></br>But to achieve that growth, companies increased work hours by 6.5 percent, hiring hundreds of thousands of people to send the unemployment rate to a 14-year low of 5.3 percent.