US productivity rises faster than expected in second quarter

Washington: U.S. worker productivity grew faster than expected ​in the second ​quarter and further gains are likely as businesses ​invest in artificial intelligence, which is expected to keep wage inflation contained.

Nonfarm productivity, which measures hourly output per worker, increased at ‌a 1.4% ⁠annualized ⁠rate last quarter after advancing at an upwardly revised 0.8% pace ​in the January-March quarter, the Labor Department's Bureau of Labor Statistics ​said on Thursday. Economists polled by Reuters had forecast productivity would grow at a 0.6% rate following a ​previously reported 0.3% pace of increase ⁠in the ‌first quarter.

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Productivity grew at a 2.2% ​rate from ​a year ago. It has grown at ⁠a 2.1% rate from the fourth quarter ​of 2019 through the second quarter of 2026. ​Economists and policymakers are anticipating an AI buildout will boost productivity and curb inflation through a reduction in labor costs.

Unit labor costs - the price of labor per single unit of output - increased at a ‌1.3% rate last quarter, after rising at a downwardly revised 1.3% pace in the first quarter.

Economists ​had expected unit ⁠labor costs to increase at a 2.1% rate last quarter after a previously reported 1.8% pace of growth in the ​January-March quarter. Labor costs grew at a 1.4% rate from a year ago. Hourly compensation increased at a 2.7% rate last quarter and grew at a 3.7% pace from a year ago.