U.S. productivity growth slumped in the second quarter while labour costs rose at the fastest pace since the end of 2004

The U.S. Bureau of Labor Statistics reported on Tuesday that in the April to June quarter, productivity growth fell to an annual rate of 1.1% in both the business sector and the nonfarm business sector, down from 4.5% and 4.3% respectively in the first three months of 2006.

In addition, the Bureau reported that unit labor costs increased 4.2% in the second quarter, up from 2.5% in the first quarter. This represents the fastest gain for unit labour costs since a 5.1% rate of increase in the fourth quarter of 2004.