Washington: U.S. worker productivity grew faster than expected in the second quarter and further gains are likely as businesses invest in artificial intelligence, which is expected to keep wage inflation contained.Nonfarm productivity, which measures hourly output per worker, increased at a 1.4% annualized rate last quarter after advancing at an upwardly revised 0.8% pace in the January-March quarter, the Labor Department's Bureau of Labor Statistics said on Thursday. Economists polled by Reuters had forecast productivity would grow at a 0.6% rate following a previously reported 0.3% pace of increase in the first quarter.Also Read: US worker productivity slows in fourth quarterProductivity grew at a 2.2% rate from a year ago. It has grown at a 2.1% rate from the fourth quarter of 2019 through the second quarter of 2026. Economists and policymakers are anticipating an AI buildout will boost productivity and curb inflation through a reduction in labor costs.Unit labor costs - the price of labor per single unit of output - increased at a 1.3% rate last quarter, after rising at a downwardly revised 1.3% pace in the first quarter.Economists had expected unit labor costs to increase at a 2.1% rate last quarter after a previously reported 1.8% pace of growth in the January-March quarter. Labor costs grew at a 1.4% rate from a year ago. Hourly compensation increased at a 2.7% rate last quarter and grew at a 3.7% pace from a year ago.
US productivity rises faster than expected in second quarter
US worker productivity saw a stronger than anticipated 1.4% rise last quarter. This growth follows a revised 0.8% increase in the prior period. Businesses investing in artificial intelligence are expected to drive further productivity gains. Unit labor costs also increased at a slower pace than economists predicted. This trend suggests AI may help keep wage inflation contained.
TL;DRAI
US worker productivity jumped 1.4% in Q2, beating 0.6% forecast, as AI investment accelerates. Unit labor cost growth slowed to 1.3% versus 2.1% forecast, signaling AI automation will compress wage inflation and IT labor budgets.
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