US business productivity growth slowed in the second quarter, a government report showed today.
In a report that came as Federal Reserve policy-makers gathered to consider raising interest rates, the Labor Department said growth in non-farm business productivity, or worker output per hour, rose at a 2.2 per cent annual rate in the second quarter after a 3.2 per cent first-quarter gain.
However, unit labour costs - a key inflation and profit pressure gauge - rose at only 1.3 per cent pace, well below the first quarter's revised 3.6 per cent advance. Economists had expected productivity to rise at a 2 per cent annual rate in the second quarter, with unit labour costs up 2.8 per cent. Bond prices rose slightly as the data eased inflation concerns. Stock prices were also up in late-morning trade.
But some economists cautioned that the longer-term trend for labour costs may be moving up, keeping pressure on the US central bank to push interest rates higher.
Over the past four quarters, unit labor costs have risen 4.3 per cent, the biggest jump since the period ending in the third quarter of 2000.