U.S. Worker Productivity Increases

Date: Washington (Reuters)

U.S. worker productivity grew faster than initially thought in the second quarter, helping to restrain labor costs and suggesting inflation pressures might continue to ease.

Nonfarm productivity, which measures hourly output per worker, increased at a 2.5% annualized rate last quarter, according to the Labor Department’s Bureau of Labor Statistics on Thursday. This was an upward revision from the 2.3% pace estimated the previous month, aligning with economists’ expectations.

Productivity increased at a 0.4% rate in the first quarter and advanced at an unrevised 2.7% pace compared to a year ago.

Unit labor costs, which reflect the price of labor per single unit of output, rose at a 0.4% rate during the April-June quarter, revised down from the earlier reported 0.9% pace. Labor costs had increased at a 3.8% rate in the January-March quarter and at a 0.3% rate year-over-year.

The Federal Reserve is expected to start cutting interest rates this month amid cooling inflation and labor market conditions. Compensation rose at a 3.0% rate last quarter, revised down from the previously estimated 3.3% pace, and advanced at a 3.1% rate year-over-year.