Worker Productivity Down; Employers Likely To Add More Jobs

The US Labor Department has released it's final report for the first quarter of 2012 and said employee productivity was down 0.9% despite overall growth of 1.9%. Most economist say this is a strong indication that employers will be adding even more jobs and will likely enter a hiring boom this summer.

Labor costs rose 1.5% in the same period and as productivity drops, it begins to cost companies more money forcing them to hire more employees to remain profitable. This is good news for the millions still looking for work, so far an estimated 4.5 million of the 14 million that lost their jobs in the last recession have found jobs and returned to work.

Despite the apparent good news, employers have so far shown a different tactic, adding a mere 69,000 jobs last month, far below the 260,000 that was added in each of the first three months of 2012.

"Going forward, the big question is the rate of gain in output growth. If it remains slow, as we feel likely, productivity gains will continue to be constrained," said Joshua Shapiro, chief U.S. economist at MFR Inc.

With so many people still out of work, economist Greg Hoffman says it is unlikely that wages will increase this year, saying there is a large labor pool to draw from negating the need to lure sought after skilled employees.

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