Productivity Falls in Q2

Worker productivity growth slowed in the second quarter of 2021, according to the Bureau of Labor Statistics… (BLS)

• Nonfarm productivity increased at a 2.3% annualized rate in Q2. This is down from the 4.3% revised rate in Q1.

• Productivity was up 2.3% compared to the last quarter and was up 1.9% compared to Q2 2020.

SWING AND A MISS: Economists had forecasted a growth rate of 3.5%

Productivity continues to grow along with wages despite hours worked falling…

• Output is now 1.2% above pre-pandemic levels but hours worked is still 2.8% below it.

• Hourly compensation rose at a 3.3% rate in Q2 which is up from the revised 1.4% growth pace in Q1.

Productivity was not dissimilar from what we saw from the overall growth rate in the second quarter. It’s not that the numbers aren’t impressive it’s just they aren’t as impressive as some of the more optimistic predictions we saw at the start of the year. However, the good news is we continue to move in the right direction. The only bad news is, it’s just not as fast as originally thought.