U.S. labor costs grew much faster than initially thought in the second quarter while worker productivity slumped, which could pressure corporate profits and business spending.
The Labor Department said on Thursday that unit labor costs, the price of labor per single unit of output, increased at a 4.3 percent annual rate as opposed to the 2.0 percent pace reported last month. Economists polled by Reuters had expected that unit labor costs would be revised up to a 2.1 percent rate.
Hourly compensation per hour jumped at a 3.7 percent rate in the second quarter instead of the previously reported 1.5 percent pace. The combination of weaker productivity and rising labor costs hurts corporate profits and could also fan inflationary pressures.
Unit labor costs rose 2.6 percent from a year ago.