US Q2 labor productivity beats forecasts

US labour productivity growth picked-up more strongly than expected during the second quarter amid revisions to compensation data for previous years which some economists said provided a strong signal for the direction of travel in wages.

Total non-farm business productivity grew by 2.9% in quarterly annualised terms, according to the Bureau of Labor Statistics, beating economists' forecasts for an increase of 2.5%.

In parallel, unit labour costs declined at an annualised clip of 0.9% versus the previous three months, which was their lowest reading since the second quarter of 2014, contrary to calls for a flat reading.

Looking at the year-on-year rates of change, the picture was exactly the opposite, with productivity higher by 1.3% and unit labour costs up by 1.9%.

In inflation adjusted terms meanwhile, hourly compensation was ahead by 0.5%.

Commenting on the data, Blerina Uruci at Barclays Research highlighted the upwards revision to the reading for compensation growth in the first quarter of 2018, from 2.7% year-on-year to 3.1%, on the back of revisions to the data going as far back as 2016.

Those revisions were made using state unemployment insurance records, which tended to be more accurate than sample-based estimates, she said; hence, she took a " strong signal from the recent improvement in the data".