The productivity of American workers grew in the second quarter at the fastest rate in almost six years as employers slashed payrolls to bolster profits.þþProductivity, a measure of how much an employee produces for each hour worked, rose at an annual rate of 6.4 percent, more than forecast, after a 0.3 percent gain in the prior three months, the Labor Department said. Labor costs fell by the most in eight years.þþLower expenses mean companies may need to lay off 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 Tuesday and Wednesday, extra time to remove stimulus.þþ“This is good for the cost structure of companies,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “The Fed will be encouraged on the inflation story. They have taken a lot of heat on the exit strategy. Certainly there is no rush to exit.”þþA report from the Commerce Department on Tuesday showed inventories at wholesalers fell in June almost twice as much as forecast, as growing sales helped distributors cut excess supply.þþThe 1.7 percent decrease in stockpiles followed a revised 1.2 percent decline in May. Wholesale inventories have had the longest series of declines since records began in 1987. Purchases climbed 0.4 percent in June for a second month.þþ“Another month of positive sales is helping to reduce inventories,” said Kim Whelan, an economist at Wells Fargo Securities in Charlotte, N.C. “As inventories decline to levels businesses are more comfortable with, production can start to ramp up.”þþThe productivity report showed labor costs decreased at a rate of 5.8 percent, the second consecutive fall and the biggest since 2001. Expenses were down 0.6 percent over the last four quarters, the first decline in five years.þþCompared with the second quarter of 2008, productivity was up 1.8 percent, the most in a year.þþ
Source: NY Times
