Productivity In U.S. Rebounds As Employers Try To Curb Costs

http://www.bloomberg.com/news/2012-08-08/productivity-in-u-s-rebounds-as-employers-try-to-curb-costs.html

The productivity of U.S. workers rebounded in the second quarter as employers sought to protect earnings by squeezing more out of existing staff.

The measure of worker output per hour increased at a 1.6 percent annual rate following a revised 0.5 percent drop in the prior three months, figures from the Labor Department showed today in Washington. Expenses per employee climbed at a 1.7 percent rate after surging a revised 5.6 percent.

The drop in productivity at the start of 2012, pared with a slowdown in profits, may be prompting companies to focus on enhancing efficiency to curb costs, making a pickup in employment more difficult to spur. A jobless rate that has held above 8 percent for more than three years is among reasons Federal Reserve policy makers said they are ready to take additional action if needed.

“Firms are going to be a lot more cautious in terms of how they increase spending,” said Michael Hanson, a senior U.S. economist at Bank of America Corp. in New York, who correctly forecast the gain in productivity. “Productivity is going to hang in there. There is no doubt that the hiring environment is much more challenging.”