According to the Bureau of Labor Statistics' latest data for U.S. productivity, productivity growth has slowed considerably compared to the last six months.
Higher productivity means that firms generate more revenue per worker without additional cost.
The added revenue reduces pressure for the firm to raise prices. A productivity growth slowdown would create inflationary wage pressures. Labor productivity rose at a 2.4 percent annual rate for the first quarter of 2000 compared with a 6.9 percent annual rate for the fourth quarter and a 5.0 percent rate for the third quarter of 1999. Even with the poor first quarter report, productivity for the past four quarters is a strong 3.7 percent. Unit labor costs were up 1.8 percent for the quarter after falling in the previous two quarters.