The annual rate of productivity dropped 1.8% in the 2nd Quarter – the highest decline since the 2nd Quarter of 2006, when the rate dropped 1.9%. Since 1995, these are the highest two drops in the productivity rate, as the chart below shows. Productivity is measured by dividing output by the total number of hours worked, as described in the Productivity and Cost Report [.pdf]. This statistic is basically the amount of goods produced per hour and it shows that businesses are producing less. Similarly, the rate of construction spending also recently declined.