U.S. productivity rises at 7.3% rate in second quarter

The productivity of American workers rose at a 7.3% annual clip in the second quarter, the government said Friday.

Economists surveyed by MarketWatch had projected a 1.4% rise, though the range of estimates was wide. This was the largest increase since the last recession was ending in 2009.

Analysts said the productivity data in the April-June quarter was not very illuminating given the deep shock to the economy from the coronavirus pandemic. U.S. GDP plunged at a 32.9% annual rate in the second quarter.

Productivity can be the most important indicator as a sign of long-run growth potential. It will be important once the crisis was over to gauge how much the pandemic reduced the economy’s productive capacity. In other words, how much permanent “scarring” was left behind.

Output in the second quarter dropped a record 38.9%. Hours worked fell a record 43%. U.S. productivity has increased at a 2.2% pace year-over-year.

Unit labor costs increase at a 12.2% rate in the second quarter. Economists said this gain reflected that the part of the economy hit hardest in the pandemic were low-wage service sectors.