Washington, DC, August 9--Productivity in the second quarter rose at a 2.2% annual rate, according to the Labor Department. In the first quarter productivity rose a revised 3.2%, it has been originally estimated to as having increased 2.9%.
Economists were expecting productivity to slow to about 2% in the second quarter.
Unit labor costs -- a key measure of inflationary pressures from compensation -- increased 1.3% in the second quarter, after rising 3.6% in the first quarter.
Despite their moderation in the second quarter, unit labor costs have risen 4.3% in the past year, the fastest gain since the third quarter of 2000.
Fed chief Alan Greenspan has stressed that the central bank is watching labor costs closely for signs of emerging inflationary pressures.
Productivity has increased 2.3% in the past four quarters, the smallest year-over-year gain since the third quarter of 2004.
In the second quarter, output in the nonfarm sector rose 4.4%, while hours worked rose 2.1%, the government said.
Real hourly compensation, adjusted for inflation, fell 0.6%, the biggest drop since the second quarter of 2004.
In the manufacturing sector, productivity increased 4.1%, while unit labor costs increased 2.3%.
Productivity is measured by units of output per hour worked. It's an essential factor in long-term economic health but is extremely difficult to measure in the short run.
