WASHINGTON(Bloomberg) — The productivity of U.S. workers rose more than projected in the second quarter, rebounding from the biggest drop in more than three decades and helping to restrain labor costs.
The measure of employee output per hour increased at a 2.5 percent annualized rate, after a revised 4.5 percent decrease in the prior three months that was the biggest since 1981, a Labor Department report showed today in Washington. The median forecast in a Bloomberg survey of 57 economists called for a 1.6 percent advance. Expenses per worker increased at a 0.6 percent pace, less than estimated.
Companies that have been relying on wringing efficiency gains from existing staff may take on more employees and increase investment as demand grows. Advances in productivity together with limited labor costs provide more room for the Federal Reserve to keep interest rates close to zero while trimming monthly bond purchases.
“As businesses see improvement in demand, they are more likely to increase hiring to keep up with orders,” said Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit. “The gains in labor costs are still subtle and very early. It’s premature to worry about labor costs overheating.”
Stock-index futures held earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in September rose 0.4 percent to 1,912.3 at 8:43 a.m. in New York following a report that Russia wants to de-escalate the crisis in eastern Ukraine.
Economists’ estimates for productivity ranged from no change to a gain of 4 percent. The prior quarter’s reading was previously reported as a drop of 3.2 percent.
Unit labor costs, which are adjusted for efficiency gains, were forecast to rise 1 percent in the second quarter, according to the Bloomberg survey median. They jumped 11.8 percent in the prior quarter, revised from an initially reported increase of 5.7 percent.
Nonetheless, revisions also showed costs barely budged in 2013, climbing 0.2 percent, down from a prior estimate of 1.1 percent. The increase was the smallest since a drop in 2010. That meant that in the 12 months through June, expenses rose 1.9 percent, down from a 2.6 percent gain in the year through March.
Adjusted for inflation, hourly earnings increased at a 0.1 percent rate, after increasing at a 4.8 percent pace.
Among manufacturers, productivity increased at a 3.6 percent rate.
The second-quarter reading on productivity was in line with the average of 2.2 percent over the period spanning 2000 to 2012.
Economic growth is improving and the labor market is strengthening while inflation is edging up closer to the Federal Reserve’s goal. That helps explain why central bank officials are continuing to trim monthly bond purchases even as they hold the target interest rate close to zero.
The U.S. expanded at a 4 percent annualized rate from April through June, after shrinking 2.1 percent in the first quarter, according to Commerce Department data. The increase matched the average growth rate from July through December of 2013 that marked the strongest six months in a decade.
Rising demand is helping underpin the labor market recovery. Employers added more than 200,000 workers to payrolls in July for a sixth straight month, the first time that’s happened since 1997, a report showed on Aug. 1. The unemployment rate advanced to 6.2 percent as more Americans entered the labor force seeking work.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast