Worker Productivity Surges and Labor Costs Drop

The productivity of U.S. workers grew in the 2nd-Q at the fastest pace in almost 6 years as employers slashed payrolls to bolster profits. Productivity, a measure of how much an employee produces for each hour worked, rose at an annual 6.4% pace, more than forecast, after a 0.3% gain the prior 3 months, Labor Dept data show. Labor costs fell by the most in 8 years. Lower expenses mean companies may need to fire fewer workers as sales stabilize, the first step toward ending the worst employment slump in the post-World War II era. Efficiency gains also help curb inflation, giving Fed Reserve policy makers extra time to remove stimulus.