Second-Quarter Productivity Slips

Worker output eases as employers reduce payrolls and working hours to offset rising costs, the government reports.

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Productivity in the U.S. business sector grew by just 2.2 percent over the second quarter, down from 2.6 percent at the start of the year, as employers reduced working hours and trimmed payrolls to offset rising costs, the Labor Department reported Friday.

Workers' hours continued to decline between April and June for the fourth consecutive quarter, dropping by 0.5 percent, the report said. At the same time, compensation costs fell by 1.4 percent after growing by 0.8 percent.

Unit labor costs, a gauge of worker pay that factors in output, grew by just 1.3 percent, roughly half the Jan.-March pace.

The declines in compensation, which includes costs for both wages and benefits, helped ease rising fears over inflation. According to the National Federation of Independent Business, small-business owners are citing inflation as their biggest business concern for the first time since the 1980s recession.

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