August 09, 2006	Wednesday	Rajab 13, 1427

WASHINGTON, Aug 8: US workers’ productivity slowed abruptly to grow by just 1.1 per cent in the second quarter, the Labour Department said on Tuesday.

The figure, however, was a little better than Wall Street’s forecast for a 0.9pc clip.

Productivity has now slowed to its weakest pace since the fourth quarter of 2005, backing other reports suggesting a slowdown in the US economy.

The government revised up productivity for the first quarter to 4.3pc from a prior estimate of 3.7pc.

Productivity, while complex to measure, is seen as an essential factor in long-term economic health, allowing companies to reap higher profits while giving workers higher pay without raising prices.

Tuesday’s estimate was a preliminary reading and is likely to be revised.

Unit labour costs -- a key inflation gauge -- rose 4.2pc in the second quarter compared with a gain of 2.5pc in the prior quarter.

While rising wages make workers happy, the Fed closely tracks this compensation gauge to make sure labour costs stay under control and do not stoke inflation pressures.—AFP