US Q2 non-farm productivity caps increase in unit labour costs

US labour productivity outpaced economists' forecasts during the second quarter, reducing unit costs.

According to the Department of Labor, in seasonally adjusted terms labour productivity grew at a quarterly annualised pace of 2.3% over the three months to June (consensus: 1.2%).

That kept the rate of increase in unit labour costs at 0.9% (consensus: 1.8%).

During the quarter, output expanded at a clip of 3.3% and hours worked by 1.0%, whilst hourly compensation increased by 3.3% and real hourly compensation by 0.4%.

On the back of Thursday's release, Michael Pearce, deputy chief US economist at Oxford Economics said: "Our wage growth tracker, which includes signals from unit labor cost growth and the employment cost index, released yesterday, suggests wage growth has declined below 4%.

"It is not far above the 3.5% growth that would usually be consistent with the Fed's 2% inflation target. If productivity growth is structurally stronger, then even wage growth of 4% could be consistent with 2% inflation."

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