US productivity surprised to the upside


In the Spring, US productivity rose 3.3% (yesterday Fed's Rosengren complained about slow productivity growth) and Labor Costs fell. Actually US productivity rose at the fastest pace since late 2013. According to Labor Department, worker productivity increased at an annual rate of 3.3% in the April - June quarter.

That's strong rebound after poor first quarter when productivity had fallen -1.1%. The distinct gain of productivity represents an upward revision from a month ago (government had estimated a rebound of 1.3%).Still even though current reading is pretty, productivity over the last year increased is up only 0.7% y/y. And what's truly important, wages are contracting. Real compensation fell at a 1.1% and declines for the second consecutive quarter.