U.S. Productivity Fell for Third Straight Quarter (LABOR MARKET MORIBUND DESPITE "JOBS" NUMBERS)

Nonfarm business productivity, measured as the output of goods and services produced by American workers per hour worked, decreased at a 0.5% seasonally adjusted annual rate in the second quarter as hours increased faster than output, the Labor Department said Tuesday.

It was the third consecutive quarter of falling productivity, the longest streak since 1979. Productivity in the second quarter was down 0.4% from a year earlier, the first annual decline in three years and just the sixth year-over-year drop recorded since 1982.

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Economists surveyed by The Wall Street Journal had expected productivity to rise at a 0.4% rate and unit labor costs to increase at a 1.8% pace during the second quarter.

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Productivity growth started to slow before the 2007-2009 recession and has all but stalled in recent years. Annual growth averaged 1.3% in 2007 through 2015, just half the average pace of 2.6% in 2000 through 2007, according to the Labor Department.

Federal Reserve Chairwoman Janet Yellen in June described the outlook for productivity growth as a "key uncertainty for the U.S. economy" that will help determine the future trend for living standards.