Summary Productivity growth slowed in the second quarter, but the rapid shifts in the industry composition of activity over the pandemic continue to muddle the trend. Unit labor cost growth remained tame on an aggregate basis, which should help to limit the upward pressure on inflation stemming from the recent pop in wages.
Industry Shifts Muddle Productivity PictureNonfarm labor productivity grew at a 2.3% annualized pace in the second quarter. That marked a slowdown from Q1 and on a year-ago basis, as the economy’s spring reopening began to benefit more labor-intensive industries like leisure & hospitality. To that end, the aggregate read on labor productivity continues to be muddled by the effects of significant compositional shifts in the economy since the outbreak of COVID and does not yet offer a clear picture of what has happened on the productivity front within industries beyond the usual post-recession bounce. READ FULL ARTICLE >>