U.S. second-quarter productivity revised sharply higher; fastest rise since 1971

WASHINGTON (Reuters) - U.S. worker productivity increased faster than initially thought in the second quarter, notching its quickest pace since 1971, but the eye-popping jump likely reflected disruptions caused by the COVID-19 pandemic, which depressed hours.

The Labor Department said nonfarm productivity, which measures hourly output per worker, increased at an 10.1% annualized rate last quarter. That was revised up from the 7.3% pace estimated in August and was the largest rise since the first quarter of 1971.

Productivity fell at a 0.3% rate in the January-March period. Hours worked plunged at a 42.9% rate instead of the 43.0% pace estimated last month. That was the largest drop since the series started in the first-quarter of 1947.

Economists polled by Reuters had forecast productivity would be revised up to a 7.5% rate in the second quarter.

Compared to the second quarter of 2019, productivity rose at a 2.8% rate. Growth in unit labor costs - the price of labor per single unit of output - rose at a downwardly revised 9.0% rate in the April-June quarter. Unit labor costs were previously reported to have jumped at a 12.2% rate.

Unit labor costs increased at a 9.6% rate in the first quarter. They rose at a 4.9% rate in from a year ago.

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama