WASHINGTON (MarketWatch) — U.S. companies are still creating plenty of jobs, but they are not wringing more productivity out of either new or old employees. The productivity of American businesses and workers fell 0.6% in the second quarter instead of 0.5%, revised government figures show. Productivity has also shown the biggest one-year decline since 2013, down 0.4% over the past four quarters. As a result, the cost of producing goods and services has risen for many companies and cut into profits despite rising sales. Unit-labor costs jumped a revised 4.3% in the second quarter vs. an initial 2% reading. Unit-labor costs have risen a slower 2.6% over the past year, however. In the spring, output of goods and services was revised down a notch to reflect a mild 1.1% increase, the Labor Department said Thursday. The amount of time employees worked rose 1.7%, a tick below the prior estimate. Hourly compensation increased at a 3.7% annual clip in the second quarter, but just 1.1% if inflation is taken into account. Productivity has barely risen 1% annually since 2007, compared to a 2.6% rate from 2000-2007 or 2.2% going back to the end of World War Two. Low productivity is a bad sign for an economy whose results can include weaker profit and slower wage gains. Economists are confounded by the slow rate of productivity since the end of the Great Recession. Some wonder if the poor numbers partly the result of how difficult it is to measure producitivity, especially in an economy dominated by service-oriented companies instead of manufacturing like in the past.

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