US Worker Productivity Slows to 1.6% While Wages Increase at 4.9%


Productivity Conceptual Model

The productivity of American workers slowed in the second quarter while wage pressures increased. The Labor Department said that productivity, the amount of output per hour of work, in the nonfarm business sector  increased at an annual rate of 1.6% in the April-June quarter, down from a 4.3% growth rate in the January-March period.

Wages registered a second sizable increase, rising at an annual rate of 4.9% in the second quarter, which may lead the Federal Reserve Board and economists to worry about inflation.

In manufacturing, the revised productivity changes in the second quarter were: 2.6% in manufacturing, 3.7% in durable goods manufacturing, and 2.3% in nondurable goods manufacturing. Manufacturing includes about 13% of U.S. business-sector employment.

Hourly compensation in the business sector grew at a 6.3% annual rate in the second quarter of 2006, compared with a 13.6% rate of growth one quarter earlier.

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