Productivity Growth Slows in Second Quarter

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orker productivity grew at a 2.5% annual rate in the second quarter, the Labor Department said Thursday, the slowest rate since the fourth quarter of 2002.

Productivity gauges how efficiently the economy operates by measuring the amount of work done by an employee in an hour. It grew at a 3.7% annual rate in the first quarter and was previously estimated at 2.9% for the second quarter.

Labor said that among manufacturers, productivity grew at a 6.9% pace in the second quarter, compared with a 2.8% increase in the first quarter.

The report said unit labor costs, which are closely watched by economists as an early warning gauge for inflation pressures, were revised down in the report. Costs gained at a 1.8% pace, off slightly from the 1.9% rate seen in the initial report.

In addition, output was revised to a 3.5% rate in the quarter, down from the initially reported 3.8% pace, and hours worked rose at a 1% clip, up from 0.8% in the original estimate.

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