U.S. worker productivity growth accelerated in the second quarter, keeping the increase in labor costs in check, and further brightening the inflation outlook.
Nonfarm productivity, which measures hourly output per worker, increased at a 2.3% annualized rate last quarter after rising at an upwardly revised 0.4% pace in the January-March period, the Labor Department's Bureau of Labor Statistics said on Thursday.
Economists polled by Reuters had forecast productivity increasing at a 1.7% rate after rising at a previously reported 0.2% pace in the first quarter. Productivity advanced at a 2.7% pace from a year ago.
Unit labor costs - the price of labor per single unit of output - rose at a 0.9% rate in the April-June quarter. Data for the first quarter was revised lower to show unit labor costs rising at a 3.8% rate instead of the previously reported 4.0% pace. Labor costs increased at a 0.5% pace from a year ago.
The government reported on Wednesday that annual labor costs recorded their smallest rise in 2-1/2 years in the second quarter. The Federal Reserve on Wednesday kept its benchmark overnight interest rate in the 5.25%-5.50% 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% rate last quarter after increasing at a 4.2% pace in the first quarter. It advanced at a 3.2% rate from a year ago.
