Productivity Grows at Slow 1% Pace, Reflecting Sluggishness in Economy
WASHINGTON -- The Labor Department boosted its estimate of non-farm productivity for the second quarter, but the figures are still symptomatic of a sluggish economy.</br></br>Per-hour work output in the non-farm economy rose at a 1% annual rate in the second period, the department said, double the 0.5% rate estimated last month, but still relatively low.</br></br>The change in the figure primarily reflects the revision the Commerce Department announced last week in its second-quarter estimate of the nation's total production, or gross national product. The revision put GNP growth at a modest 2% annual rate, up from the 1.7% rate calculated in July. The Commerce Department said the upward revision mostly was due to a larger-than-expected rise in inventories during June.</br></br>The revised second-quarter productivity gain is based on a 2.2% increase in non-farm output and a 1.2% increase in hours worked. The earlier estimate was based on a 1.9% increase in output and a 1.4% increase in hours. All the figures represent seasonally adjusted annual rates.</br></br>The latest productivity figures continue a pattern of peaks and valleys that characterize economic growth in the later stages of an economic cycle. Productivity generally rises sharply in the early stages of a business recovery and then tapers off as employers hire more workers. Productivity spurted at a 7.1% annual rate in the 1983 second quarter. Lately, as corporations have been reducing the number of employees or cutting their work schedules, productivity has seesawed from quarter to quarter.