US productivity increased at a healthy pace in Q-2, a trend that could lead to higher wages if it continues.
The Labor Department said Thursday that productivity — or output per hour worked rose 2.3% in the April-June Quarter, down from 3.5% in Q-1 of the year. The Q-1 gainer was the best in 4 years.
Greater productivity is a Key ingredient in raising living standards. It enables companies to lift worker pay without raising prices on costumers.
The recovery, now in its 11th year, has been for 8 yrs held back by historically weak productivity growth. It has grown at roughly 65% of its historical average since the recession began.
Yet productivity has picked up in recent Quarters and expanded 1.8% in the past year. That’s below the 2.1% long-term annual average, but better than the 1.3% average increase since the great recession began in 2007.
Labor costs also rose at a healthy pace too, which could push up inflation in the coming months. Labor costs grew 2.4%, following a large 5.5% increase in Q-1 that was revised higher.
Last month the Commerce Department revised its figures on GDP the broadest measure of the economy’s growth, and found that incomes rose strongly in Q-1.
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