U.S. labor productivity increases less than forecast in Q2

The preliminary data from the U.S. Labour Department showed on Tuesday that nonfarm business sector labor productivity in the United States rose 2.3 percent q-o-q in the second quarter of 2021, as output surged 7.9 percent q-o-q and hours worked increased 5.5 percent q-o-q (seasonally adjusted). This was worse than economists’ forecast for a 3.5 percent q-o-q advance after a revised 4.3 percent q-o-q gain in the first quarter (originally a 5.4 percent q-o-q climb).

In y-o-y terms, the labor productivity went up 1.9 percent in the second quarter, reflecting a 15.8-percent jump in output and a 13.6-percent climb in hours worked.

Meanwhile, unit labor costs in the nonfarm business sector in the second quarter rose 1.0 percent q-o-q compared to a revised 2.8 percent q-o-q drop in the prior quarter (originally a 1.7 percent q-o-q increase). Economists had forecast a 1.1 percent gain in first-quarter unit labor costs.

Unit labor costs quarterly gain reflected a 3.3-percent q-o-q increase in hourly compensation and a 2.3-percent rise in productivity.

Compared to the corresponding period of 2020, unit labor costs edged up 0.1 percent, as hourly compensation increased 2.0 percent and productivity grew 1.9 percent.