Washington, DC, August 8, 2006--Productivity rose at a slower pace in the second quarter, but a key gauge of inflation accelerated, the Labor Department said Tuesday.
Non-farm productivity increased at a 1.1% annual rate in the second quarter. In the first quarter, productivity was revised to a 4.3% increase from 3.7% previously.
Unit labor costs--a key inflation gauge--increased 4.2% in the nonfarm business sector during the second quarter, the government's data showed. This is the fastest quarterly pace since the fourth quarter of 2004. In addition, revisions to previous quarters put unit labor costs on an accelerating trend.
Both productivity and unit labor costs were above expectations. Economists surveyed by MarketWatch had predicted productivity would rise 0.9%, while unit labor costs were expected to rise 3.5%. See Economic Calendar.
In the past four quarters, productivity in the nonfarm sector has increased 2.4%, while unit labor costs are up 3.2%, the most since the final three months of 2000.
In the second quarter, output in the nonfarm business sector rose 2.5%. Hours worked rose 1.4%.
Adjusted for inflation, hourly compensation increased 0.4% in the second quarter
In the manufacturing sector, productivity increased at a 3.0% annual rate in the second quarter, while unit labor costs fell 1.2%.
