U.S. Labor Productivity Unexpectedly Declines 0.5% In Q2

(RTTNews) - With hours worked increasing by more than output, the Labor Department released a report on Tuesday showing an unexpected decline in U.S. labor productivity in the second quarter.

The report showed that productivity fell by 0.5 percent in the second quarter after sliding by 0.6 percent in the first quarter. The decrease came as a surprise to economists, who had expected productivity to climb by 0.5 percent.

The unexpected drop in productivity, a measure of output per hour, came as hours worked jumped by 1.8 percent in the second quarter after surging up by 1.4 percent in the first quarter.

Output climbed by a more modest 1.2 percent in the second quarter following a 0.7 percent increase in the previous quarter.

Meanwhile, the Labor Department said unit labor costs surged up by 2.0 percent in the second quarter after edging down by a revised 0.2 percent in the first quarter.

Economists had expected labor costs to climb by 1.8 percent compared to the 4.5 percent jump that had been reported for the previous quarter.

The increase in labor costs came as hourly compensation increased by 1.5 percent in the second quarter after falling by 0.8 percent in the first quarter.

On the other hand, the report said real hourly compensation, which takes changes in consumer prices into account, slumped by 1.1 percent.

Compared to the same quarter a year ago, productivity was down by 0.4 percent in the second quarter, as output rose by 1.1 percent but hours worked increased by 1.5 percent.

Unit labor costs were up by 2.1 percent year-over-year in the quarter amid a 1.7 percent increase in hourly compensation.