U.S. productivity remained elevated in the second quarter despite the housing slump and continuing fallout from the credit crunch.

Nonfarm business productivity increased 2.2%, at an annual rate, in the second quarter, the U.S. Labour Department said today. Wall Street economists had expected a 2.5% rise.

Compared to the second quarter of 2007, productivity rose 2.8%. Productivity is defined as output per unit of labor.


Unit labor costs — a key gauge of inflationary pressures — advanced just 1.3%, below Wall Street forecasts for a 1.6% increase. Labor costs were up a modest 1.5% from one year ago, an indication that the economic slowdown and slackening jobs market is making it harder for workers to command higher wages.


Manufacturing sector productivity fell 1.4% last quarter, according to today’s report, with losses concentrated in durable-goods manufacturing.

The decline in manufacturing productivity was the first in over two years and the durable-goods drop was the largest since 1990

Nonfarm business output increased 1.7% during the second quarter, the Laboir Department said. Hours worked fell 0.5%. Hourly compensation increased 3.6%.