U.S Q2 productivity growth unrevised at 2.9%

U.S. worker productivity rose at its fastest pace in more than three years in the second quarter, as previously reported, but the trend in productivity growth remained moderate.

The Labor Department said on Thursday nonfarm productivity, which measures hourly output per worker, increased at an unrevised 2.9 percent annualized rate in the April-June quarter. That was the strongest pace since the first quarter of 2015.

Productivity grew at a 0.3 percent rate in the first quarter.

Economists polled by Reuters had forecast second-quarter productivity being raised to a 3.0 percent rate, in line with a modest upward revision to gross domestic product growth for that period. The economy grew at a 4.2 percent rate in the April-June period, almost double the 2.2 percent pace logged in the first quarter.

Compared to the second quarter of 2017, productivity increased at an unrevised rate of 1.3 percent. That suggests the second-quarter GDP growth pace is probably unsustainable.

Productivity grew at an average rate of 1.3 percent between 2007 and 2017. That was slower than the 2.7 percent average pace between 2000 and 2007.

Strong productivity in the second quarter weighed on growth in labor costs. Unit labor costs, the price of labor per single unit of output, fell at a 1.0 percent pace in the second quarter, rather than the 0.9 percent rate estimated last month.

That was the weakest pace since the third quarter of 2014. Unit labor costs grew at a 3.4 percent pace in the first quarter. Labor costs increased at an unrevised 1.9 percent rate compared to the second quarter of 2017, pointing to moderate wage inflation.

Reuters

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell