This is When the Jobs ‘Recovery’ Goes KABOOM

Jon Blogosphere, Economy, Market Commentary

A peculiar phenomenon has set in.
This cannot be good for jobs: In the second quarter, nonfarm business sector labor productivity – defined as output per hour worked – fell by an annual rate of 0.5% from the first quarter, the Bureau of Labor Statistics reported today. The third quarterly decline in a row.
The last time it dropped for three quarters in a row was from Q3 1973 through Q3 1974 (5 quarters). Alas, in November 1973, the economy entered a recession. Several quarters in a row of declining productivity is not kind to the economy.
The productivity decline in the second quarter this year was the result of output edging up at a seasonally adjusted annual rate of 1.2% while hours worked to obtain this output rose 1.8%. Year-over-year, productivity fell 0.4%.
Here is what this looks like on a quarterly (blue columns) and year-over-year (red line) basis (chart via BLS):

This post was published at Wolf Street by Wolf Richter ‘ August 9, 2016.