Labor productivity expanded at twice the rate expected in the second quarter, accelerating from the start of the year.
The Bureau of Labor Statistics said Thursday that labor productivity, the output per hour of nonfarm employees across the economy, increased at a 1.4 percent annualized rate in the April through June period.
That was an acceleration in productivity growth from the first quarter. The first quarter’s growth rate was revised up to 0.8 percent from the preliminary estimate of 0.3 percent.
Economists had forecast just 0.7 percent growth in the second quarter.
Unit labor costs — what businesses pay employees to produce one unit of output — rose a less-than-expected 1.3 percent. That’s evidence that the labor market is not a significant source of inflation right now.
The increase in productivity reflected the fastest growth in output since the third quarter of 2025 and a deceleration in the amount of hours worked.
Rising productivity is regarded by many economists as the key to noninflationary economic growth. In a period in which the workforce is growing slowly, thanks to falling fertility among U.S. residents two decades ago that continues today and stricter enforcement of immigration laws, productivity growth is likely to be the main driver of economic growth.
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