US worker productivity accelerates in Q2; labour costs tame

US WORKER productivity growth accelerated in the second quarter, keeping the increase in labour costs in check, and further brightening the inflation outlook.

Nonfarm productivity, which measures hourly output per worker, increased at a 2.3 per cent annualised rate last quarter after rising at an upwardly revised 0.4 per cent pace in the January-March period, the Labor Department’s Bureau of Labor Statistics said on Thursday (Aug 1).

Economists polled by Reuters had forecast productivity increasing at a 1.7 per cent rate, after rising at a previously reported 0.2 per cent pace in the first quarter. Productivity advanced at a 2.7 per cent pace from a year ago.

Unit labour costs – the price of labour per single unit of output – rose at a 0.9 per cent rate in the April-June quarter. Data for the first quarter was revised lower to show unit labour costs rising at a 3.8 per cent rate instead of the previously reported 4.0 per cent pace. Labour costs increased at a 0.5 per cent pace from a year ago.

The government reported on Wednesday that annual labour costs recorded their smallest rise in 2½ years in the second quarter. The Federal Reserve on Wednesday kept its benchmark overnight interest rate in the 5.25 per cent-5.50 per cent range, where it has been since last July, but opened the door to reducing borrowing costs as soon as its next meeting in September.

Compensation rose at a 3.3 per cent rate last quarter, after increasing at a 4.2 per cent pace in the first quarter. It advanced at a 3.2 per cent rate from a year ago. REUTERS