WASHINGTON (AP) — U.S. companies got more output from their workers this spring than initially thought. Productivity rose at a modest 2.2 percent annual rate in the April-June quarter, largely because employers cut back sharply on hiring.
Most economists expect productivity will slow later this year, a trend that could boost hiring.
The Labor Department said Wednesday that productivity in the second quarter was better than its initial estimate of a 1.6 percent gain.
The main reason for the increase was the government revised growth in the second quarter to an annual rate of 1.7 percent, up from an initial estimate of 1.5 percent.
That led to more output, which boosted productivity. Productivity is the amount of output per hour worked.
Labor costs rose at an annual rate of 1.5 percent, slightly lower than the 1.7 percent initially estimated.
Rising productivity can boost corporate profits. It can also slow job creation if it means companies are getting more from their current staff and don't need to add workers.
Still, there are limits to how much companies can squeeze from their staffs. When that happens, productivity slows and company typically must hire more workers to keep pace with demand.
Economists said they expected productivity will slow from the spring pace for the rest of this year and through 2013. Michael Englund, chief economist at Action Economics, said he was looking for productivity growth at a slight 1 percent or less in 2013.
Peter Newland, senior economist at Barclays, said productivity should slow as companies increase hiring in coming months.
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