Productivity Surges

People were complaining that Q2 earnings reports were good simply due to cost-cutting. That’s true, but they said it as if it doesn’t count. Improving productivity is crucial for an expanding economy:

The productivity of U.S. workers grew in the second quarter at the fastest pace in almost six years as employers squeezed more out of remaining staff to bolster profits.
Productivity, a measure of how much an employee produces for each hour worked, rose at an annual 6.4 percent pace, more than forecast, after a 0.3 percent gain the prior three months, Labor Department data showed today in Washington. Labor costs fell by the most in eight 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 Federal Reserve policy makers, meeting today and tomorrow, extra time to remove stimulus.

Posted by Eddy Elfenbein on August 11th, 2009 at 8:51 am

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