U.S. Labor Productivity Rebounds 2.5% In Q2, More Than Expected

(RTTNews) - Labor productivity in the U.S. increased by more than anticipated in the second quarter, according to a report released by the Labor Department on Friday, with the jump in productivity contributing to a smaller than expected increase in labor costs.

The report said labor productivity climbed by 2.5 percent in the second quarter compared to economist estimates for an increase of about 1.5 percent.

However, the bigger than expected increase in productivity came on the heels a downwardly revised 4.5 percent drop in productivity in the first quarter. The decrease had been reported at 3.2 percent.

The rebound in productivity, a measure of output per hour, came as output surged up by 5.2 percent in the second quarter after tumbling by 2.4 percent in the first quarter.

Hours worked also increased by 2.7 percent in the second quarter compared to the 2.1 percent growth seen in the previous quarter.

Reflecting the rebound in productivity, the report also said unit labor costs edged up by just 0.6 percent in the second quarter following an upwardly revised 11.8 percent jump in the first quarter.

Labor costs had been expected to climb by 1.4 percent compared to the 5.7 percent increase that had been reported for the previous quarter.

Along with the rebound in productivity, the substantial slowdown in the pace of growth in labor costs also came as hourly compensation increased by 3.1 percent in the second quarter compared to the 6.8 percent jump in the first quarter.

Real hourly compensation, which takes changes in consumer prices into account, edged up by 0.1 percent in the second quarter after surging up by a revised 4.8 percent in the fourth quarter.

Compared to the same quarter a year ago, productivity rose by 1.2 percent in the second quarter, as output and hours worked increased by 3.2 percent and 2.0 percent, respectively.

Unit labor costs were up by 1.9 percent year-over-year in the second quarter amid a 3.1 percent increase in hourly compensation.