Americans are working more for more money, according to a Q2 Productivity and Costs report (link opens in PDF) released today by the Labor Department.

Nonfarm business sector labor productivity increased an annualized 0.9% for the second quarter, driven primarily by a Q/Q 2.6% boost in output and a 1.7% bump in the number of hours worked. After dropping off a revised 1.7% in Q1, analysts had expected a slightly smaller 0.6% comeback. 

Productivity measures output per hour of work. Weak productivity suggests that companies may have to hire because they can't squeeze more work from their existing employees -- that is, if demand for a company's products is growing.


Productivity growth has been weaker recently, rising 1.5% in 2012 and 0.5% in 2011. Annual productivity growth averaged 3.2% in 2009 and 3.3% in 2010. In records dating back to 1947, it's been about 2%.

While productivity made gains for Q2, labor costs managed to increase at an even faster 1.4% rate. The 0.9% increase in productivity was accompanied by a 2.3% bump in average hourly compensation. With Q1's revised labor costs down a significant 4.2%, analysts also underestimated Q2's labor cost growth at just 1%. 

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Source: bls.gov. 

For manufacturing, productivity increased 2.7%, while labor costs headed 1.4% higher.

Comparing this quarter to Q2 2012, overall productivity remains unchanged, while unit labor costs are up 1.6%. 

-- Material from The Associated Press was used in this report.

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The article Q2 Productivity Up 0.9%, Labor Costs Up 1.4% originally appeared on Fool.com.

Fool contributor Justin Loiseau has no position in any stocks mentioned. You can follow him on Twitter @TMFJLo and on Motley Fool CAPS @TMFJLo. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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