Productivity Decelerates, Unit Labor Costs Rise More-Than-Expected

- Final 2Q Non-farm Productivity rose 1.8% versus estimates of a 2.1% gain and prior estimates of a 2.2% increase.
- Final 2Q Unit Labor Costs rose 2.5% versus estimates of a 1.4% gain and prior estimates of a 1.3% increase.

BOTTOM LINE: US worker productivity grew at a slower-than-expected pace from April through June and labor costs accelerated, which may prompt the Fed to keep raising interest rates, Bloomberg reported. The 2.5% increase in unit labor costs is still below the long-term average of a 3.4% quarterly increase. However, hurricane rebuilding could push up labor costs temporarily to unacceptable levels.