Gains are the biggest in more than a year as businesses increased output with fewer workers.
September 4, 2003: 8:57 AM EDT
WASHINGTON (Reuters) - The productivity of U.S. businesses surged in the second quarter, allowing firms to boost output while reducing the overall number of hours worked, the government said on Thursday.
U.S. non-farm productivity climbed at a 6.8 percent annual rate during the second quarter, well above the previously reported 5.7 percent clip, the Labor Department said.
The better-than-expected productivity performance was the strongest since the first quarter of last year.
The report showed increases in efficiency helped businesses keep the cost of production under wraps.
Unit labor costs, a closely monitored gauge of potential wage pressures, fell a revised 2.8 percent, a good sign for firms struggling to shore up profitability. The department had initially said unit labor costs fell a less dramatic 2.1 percent.
Economists polled by Reuters had expected a 6.2 percent gain in productivity and a 2.7 percent drop in unit labor costs.
Strong advances in productivity - or output per hour of all workers -- have allowed business to increase production without adding workers to their payrolls. Though the economy began to climb out of recession in November 2001, it continued to lose jobs.
Economists say, however, that in the long run strong advances in productivity are good for the economy, since improved efficiency is the main building block for better living standards.
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