U.S. productivity growth slowed in the quarter

U.S. worker productivity growth slowed down in the second quarter and labor costs were also weaker than estimated, said the Labor Department.

Nonfarm productivity increased at 2.3% annualized rate last quarter.

Productivity rose 1.9% compared to the second quarter of the previous year. In the quarter, hours worked increased 5.5% compared to 4% growth rate in the previous quarter.

Though, overall output is 1.2% above pre-pandemic levels but hours worked are still 2.8% lower.

According to a survey by National Federation of Independent Business, small business owners were not confident in economic recovery in July due to labor shortages.

Reuters reported that Oxford Economics lead U.S. economist Lydia Boussour said the pandemic appears to have "induced an upside shock to productivity."

"The adoption of technology has accelerated, new firms are being created at an historic pace, and the shift to remote work is likely to outlast the crisis," she said.

"While some of the pandemic-driven efficiencies could take years to be fully realized, we think these four forces will lead to a sustained productivity revival in the medium run."

(With inputs from Reuters)

Picture Credits: Reuters