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Worker output rose at 1.5% annual pace


WASHINGTON - The productivity of U.S. workers rose in the second quarter at a faster pace than earlier estimated, the government reported yesterday.

The Labor Department's measure of how much work is performed by one person in an hour rose at a 1.5 percent annual pace from April to June. The earlier estimate was for a 1.1 percent increase. The second-quarter gain follows an 8.6 percent surge in the first three months of the year.

Productivity was 4.8 percent higher than in last year's second quarter, up from the previous estimate of a 4.7 percent rise and the strongest gain since 1983.

The rise reflects efforts to boost efficiency by companies such as Bassett Furniture Industries Inc., which reported a 22 percent productivity gain at one plant.

"At a time when companies are not able to raise their prices, they've been able to squeeze costs out of the production process," said Stephen Stanley, an economist at Greenwich Capital Markets Inc. in Greenwich, Conn.

Economists had expected the government to report that productivity in the second quarter grew at a 1.1 percent annual rate, the same as previously reported, based on the median of 52 forecasts in a Bloomberg News survey.

Unit labor costs, the amount paid to workers for each unit of production, rose at a 2.1 percent annual rate, down from the earlier estimate of a 2.4 percent rate of increase.

In the first quarter, the costs declined at a rate of 4.6 percent. Economists expected a 2.4 percent rise in unit labor costs at an annual rate, as initially estimated.

Hours worked fell at a 0.7 percent pace, the same as previously reported. In the first quarter, hours worked declined 2.2 percent. Employers have reduced the number of hours worked for five straight quarters. Output increased at a 0.8 percent rate from April through June, up from the earlier estimate of a 0.5 percent gain. It rose 6.2 percent in the previous three months.

The slower pace of productivity growth in the second quarter compared with the previous three months reflected a cooling in the recovery from a recession that started in March last year. The economy expanded at a 1.1 percent rate in the second quarter after growing at a 5 percent pace during the first three months of the year.

The economy is expected to grow at a 2.6 percent annual pace in the current quarter and by a 3 percent rate in the final three months of the year, according to the latest Blue Chip Economic Indicators survey.

For the year, growth is expected to amount to 2.3 percent, the survey found. In the 12 months following each of the nine previous recessions, the economy grew at an average 7 percent pace, according to Bloomberg News calculations.

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