US unit labour cost growth points to faster core inflation, economists say

Labour productivity in the States grew more quickly than expected during the second quarter, but so did unit labour costs.

And even more so taking into account the revisions carried out to the historical data, which pointed to stronger core inflation pressures going forwards, some economists said.

According to the Department of Labor, non-farm labour productivity in the US grew at a quarterly annualised pace of 2.3% over the three months to June (consensus: 1.4%), while unit labour costs rose by 2.4% (consensus: 1.8%).

Versus a year ago on the other hand, whereas productivity was 1.8% higher, unit labour costs were ahead by 2.5%.

On the back of the revisions to the historical data by Labor, unit labor costs were now estimated to have jumped at an annualised pace of 5.5% during the first three months of 2019, up from the 1.6% drop previously believed.

"In short, while the pre-revision weakness of ULC growth was consistent with moderating core price inflation, the post-revision strength points to a rebound," said Capital Economics's Michael Pearce.