U.S. Labor Productivity Surges in Q2, Doubling Forecasted Growth

According to the Bureau of Labor Statistics, nonfarm labor productivity expanded at a 1.4% annualized rate in the April-June period, outpacing the 0.7% economists had predicted. The first quarter’s growth was revised upward to 0.8% from an earlier 0.3% estimate, indicating a continuing upward trend. Unit labor costs increased by 1.3%, a modest rise that points to a muted role for the labor market in current inflation.

This productivity jump marks the quickest rise in output since the third quarter of 2025 and occurred alongside a deceleration in total hours worked. Analysts view strong productivity as essential for sustaining growth without triggering inflation, especially as workforce expansion slows due to demographic and immigration factors.