Financial News: U.S. Labor Productivity Jumps 2.5% In Q2, More

U.S. Labor Productivity Jumps 2.5% In Q2, More Than Previously Estimated

09/05/2024 - 09:58:00 (RTTNews)

(RTTNews) - A report released by the Labor Department on Thursday showed labor productivity in U.S. jumped by more than previously estimated in the second quarter, while unit labor costs rose by less than previously estimated.

The Labor Department said labor productivity shot up by 2.5 percent in the second quarter compared to the previously reported 2.3 percent surge. Economists expected the pace of productivity growth to be unrevised.

The upwardly revised productivity growth in the second quarter reflects a significant acceleration compared to the 0.4 percent increase in the first quarter.

The bigger than previously estimated jump in productivity, a measure of output per hour, came as the spike in output was upwardly revised to 3.5 percent from 3.3 percent but the increase in hours worked was unchanged at 1.0 percent.

Meanwhile, the report said unit labor costs rose by 0.4 percent in the second quarter compared to the previously reported 0.9 percent advance. Economists had expected the pace of labor cost growth to be unrevised.

The downwardly revised increase in labor cost growth in the second quarter compares to the 3.8 percent spike seen in the first quarter.

The smaller than previously estimated increase in labor costs reflected the upward revision to productivity as well as a downward revision to hourly compensation, which jumped by 3.0 percent compared to the previously reported 3.3 percent surge.

The growth in real hourly compensation, which takes changes in consumer prices into account, was also downwardly revised to 0.1 percent from 0.4 percent.

"The rebound in productivity growth in the second quarter was revised slightly higher, contributing to an even greater slowing in unit labor cost growth," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

She added, "That will add to the Fed's confidence that inflation is on a sustainable path to its 2% target, making the decision to begin the rate-cutting process later this month an easier one."

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