2Q Productivity Up 1.3%; Labor Costs Grow 2.2%

U.S. nonfarm unit productivity rose at a 2.2% annual rate in the second quarter, below expectations and a slower pace than in the previous quarter, the Bureau of Labor Statistics reported Friday.

Unit labor cost growth slowed to a 1.3% pace in the second quarter from a revised 2.5% pace in the previous quarter due to much slower compensation growth.

Annual revisions to the gross domestic product data were incorporated into the report. First-quarter productivity was unrevised at plus-2.6%, but unit labor costs were revised up to a 2.5% increase from the previously reported 2.2% rise.

Analysts expected productivity growth to slow modestly to a 2.5% rate of growth in the second quarter, while unit labor costs were expected to slow to a 1.6% growth pace.

In the second quarter, output growth accelerated to a 1.7% gain from 0.9% in the previous quarter, while hours worked posted a 0.5% decline compared with the 1.6% decline in the previous quarter.

The implicit price deflator slowed to a 0.5% pace in the quarter, down from 2.1% in the previous quarter. However, due to the drop in nominal compensation, real compensation fell 1.4% in the second quarter after a 0.8% rise in the first quarter.

Year-over-year growth in productivity slowed to a 2.8% rate, down from 3.3% in the previous quarter. Unit labor cost growth accelerated to a 1.5% year-to-year gain from the 0.3% rise in the previous quarter.

— Market News International

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