U.S. Worker Productivity Surpasses Expectations in Q2

U.S. worker productivity rose at an annualized rate of 2.5% in the second quarter, surpassing initial estimates. This growth moderated labor costs, hinting at decreasing inflation pressures. Unit labor costs also saw a downward revision. Compensation increases were lower than initially reported but remained positive.

U.S. worker productivity grew faster than initially thought in the second quarter, curbing labor costs and indicating that inflation pressures could 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 previously estimated 2.3% pace, aligning with economists' expectations. Productivity had increased at a 0.4% rate in the first quarter and 2.7% from a year ago. Unit labor costs, or the price of labor per unit of output, rose at a 0.4% rate in the April-June quarter, revised down from 0.9%.

In the January-March period, labor costs increased at a 3.8% rate and at a 0.3% rate over the past year. The Federal Reserve is anticipated to cut interest rates this month amidst cooling inflation and labor market conditions. Compensation increased at a revised rate of 3.0% last quarter, down from an estimated 3.3%, and grew at a 3.1% rate over the past year.

(With inputs from agencies.)