US Q2 non-farm productivity caps increase in unit labour 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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