The productivity of U.S. workers slowed sharply to an annual rate of increase of 1.1 percent in the second quarter, down from a 4.3 percent rate of increase in the first quarter, the Labor Department reported Tuesday.

As the productivity, the amount of output per hour of work, declined sharply, labor costs, as measured by each unit of output, rose at an annual rate of 4.2 percent in the spring, up from a 2.5 percent rate of increase in the January-March quarter

Analysts said the slowdown in productivity growth in the second quarter was mainly caused by a sharp slowdown of overall economic growth, from a 5.6 percent rate in the first quarter to just 2.5 percent economic growth in the April-June quarter.

Productivity allows companies to pay their workers more based on their increased efficiency without having to raise the price of their products, which would increase inflation.

However, the downside of that increased efficiency is that companies, by getting more output from their existing work force, are able to avoid hiring new workers.

Source:Xinhua