Key facts
- U.S. nonfarm productivity rose at a 1.4% annualized rate in the second quarter.
- This figure surpassed economists' forecasts of a 0.6% increase.
- Unit labor costs increased at a 1.3% rate in the second quarter.
- Labor costs grew at a 1.4% rate year-over-year.
- Hourly compensation increased at a 2.7% rate in the second quarter.
U.S. worker productivity experienced a faster-than-expected increase in the second quarter, with nonfarm productivity rising at a 1.4% annualized rate. This growth surpassed the 0.6% rate forecast by economists polled by Reuters. The previous quarter's productivity gain was revised upward to 0.8% from 0.3%.
Concurrently, unit labor costs, which represent the price of labor per unit of output, increased at a 1.3% rate in the second quarter. This was also lower than the anticipated 2.1% rise and followed a downwardly revised 1.3% increase in the first quarter. Labor costs grew 1.4% from a year ago, while hourly compensation rose 2.7% last quarter and 3.7% year-over-year.
Economists and policymakers are observing these trends as businesses invest in artificial intelligence, which is expected to boost productivity and potentially curb inflation by reducing labor costs.