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Worker productivity and labor costs rise in second quarter

August 16, 2013|By David Pierson
  • Companies may have to begin hiring more as the U.S. workforce shows signs of reaching its maximum productivity.
Companies may have to begin hiring more as the U.S. workforce shows signs… (T.J. Kirkpatrick )

Worker productivity in the U.S. rose more than expected in the second quarter and labor costs grew at a modest pace over the same period.

A gauge of worker output per hour grew at a 0.9% annual pace between April and June, the Labor Department said Friday.

That beat a median forecast of 0.6% in a Bloomberg survey of economists.

Labor costs grew a modest 1.4% in the second quarter, up from the 4.2% drop the previous quarter.

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Analysts said the numbers suggest U.S. workers are reaching their limits of efficiency.

"Productivity is growing at an extremely slow pace,” Guy Berger, an economist at RBS Securities Inc. in Stamford, Conn., told Bloomberg. "We’re in an environment where businesses are finding it very difficult to eke out more from the labor they employ. We could see more hiring, but the bad news is, if you’re a worker, you’re seeing your paycheck barely go up."

Experts don't expect a hiring binge just yet since the U.S. economy grew by only a 1.7% annual rate the second quarter.

"Companies will have to start to increase their workforce and start hiring more aggressively should the upward trend in the economy continue," Annalisa Piazza, an analyst at Newedge Strategy, told the Associated Press.

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