The Bureau of Labor Statistics publishes the quarterly report of productivity and costs using output data from the Bureau of Economic Analysis and the Census Bureau, labor cost data from the Bureau of Labor Statistics and the BEA, and additional data from the Federal Reserve Board. The report provides detailed information on labor costs and usage across different sectors of the United States economy.
Productivity growth is critical because it allows for higher wages and faster economic growth without inflationary consequences. In periods of robust economic growth, productivity ensures that inflation will remain well behaved despite tight labor markets. Productivity growth is also a key factor in helping to increase the overall wealth of an economy since real wage gains can be made when workers are more productive per hour.
According to the BLS, nonfarm business sector labor productivity increased at a 0.9 percent annual rate during the second quarter of 2013. The increase in productivity reflects increases of 2.6 percent in output and 1.7 percent in hours worked. These figures are all improvements over the first quarter. Productivity in the manufacturing sector continued to grow at a rapid pace in the second quarter (up 2.7 percent), reflecting growth in output per worker (output grew 0.1 percent and hours worked fell 2.6 percent). While productivity increases are important for the long term growth of the economy, at least in manufacturing, the recovery is in fact “jobless” as businesses invest in capital rather than labor to increase their overall output.
While 2nd quarter productivity numbers were good, overall productivity continues to fall as the economy struggles out of recession. Hourly compensation figures were revised upward for 2012, but fell pretty dramatically in the 1st quarter of this year. They may have stabilized in the 2nd quarter, but this is still subject to revision. Without sustained productivity growth, business cannot expand wages, and this will continue to put pressure on the demand side of the economy.