Productivity Rises More Than Expected

Productivity Rises More Than Expected

Productivity surged in the spring by the largest amount in almost six years while labor costs plunged at the fastest pace in nine years.
The Labor Department said Tuesday that productivity, the amount of output per hour of work, rose at an annual rate of 6.4 percent in the April-June quarter, while unit labor costs dropped 5.8 percent. Both results were greater than economists expected.
Productivity is a key ingredient for rising living standards because it means that companies can pay their workers more with the wage increases financed by rising output.
However, in the current recession, companies have been using the productivity gains to bolster their bottom lines in the face of declining sales. Many companies have been reporting second-quarter earnings results that have beaten expectations despite falling sales, due largely to their aggressive cost cutting.

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Of course productivity rose, people in fear for their jobs are willing to work harder to keep them.

I am betting that a lot of people skipped their vacations this year.

And quit using their sick days to take Fridays off.

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