US worker productivity growth rise record high in Q2

US worker productivity rose at its fastest pace in more than three years in the second quarter (Q2), as previously reported, but the trend in productivity growth remained moderate.

The US Labor Department has said that nonfarm productivity increased at an unrevised 2.9 per cent annualised rate in the Q2. That was the strongest pace since the first quarter of 2015.

Productivity grew at a 0.3 per cent rate in the first quarter of the current year, reports Reuters.

Economists polled by Reuters had forecast Q2 productivity being raised to a 3.0 per cent rate, in line with a modest upward revision to gross domestic product growth for that period.

The economy grew at a 4.2 per cent rate in the Q2 period, almost double the 2.2 per cent pace logged in the Q1.

Compared to the April-June quarter of 2017, productivity increased at an unrevised rate of 1.3 per cent. That suggests the Q2 GDP growth pace is probably unsustainable.

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

Strong productivity in the Q2 weighed on growth in labour costs. Unit labour costs, the price of labour per single unit of output, fell at a 1.0 per cent pace in the Q2, rather than the 0.9 per cent rate estimated last month.

That was the weakest pace since the Q3 of 2014. Unit labour costs grew at a 3.4 per cent pace in the Q1. Labour costs increased at an unrevised 1.9 per cent rate compared to the Q2 of 2017, pointing to moderate wage inflation.