Preliminary data released by the Labor Department on Tuesday showed labor productivity in the U.S. increased by much less than expected in the second quarter.
The Labor Department said labor productivity jumped by 2.3 percent in the second quarter after soaring by a downwardly revised 4.3 percent in the first quarter.
Economists had expected productivity to surge up by 3.5 percent compared to the 5.4 percent spike that had been reported for the previous quarter.
The smaller than expected increase in productivity, a measure of output per hour, came as a 7.9 percent leap in output was partly offset by a 5.5 percent jump in hours worked.
"We anticipate limited productivity scarring from the pandemic and expect a mix of cyclical and structural factors will power above-trend productivity growth in the post-Covid era," said Lydia Boussour, Lead U.S. Economist at Oxford Economics.
She added, "These factors include a strong investment cycle, increased business dynamism, faster technology adoption, and lasting remote work."
The report also showed unit labor costs climbed by 1.0 percent in the second quarter, just shy of economist estimates for an increase of 1.1 percent.
Meanwhile, the 1.7 percent jump in labor costs previously reported for the first quarter was revised to a 2.8 percent decrease.
The Labor Department said hourly compensation surged up by 3.3 percent in the second quarter after climbing by a revised 1.4 percent in the first quarter.
Real hourly compensation, which takes into account changes in consumer prices, tumbled by 4.8 percent in the second quarter after slumping by 2.2 percent in the first quarter.
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December 26, 2025 08:42 ET Third quarter economic growth data from some major economies including the U.S. were the main news in this holiday shortened week. GDP growth and industrial production data from the U.S. helped to boost morale, while the consumer confidence survey results were less upbeat. In Europe, the quarterly economic growth data from the U.K. drew attention, while the minutes of the Australian central bank’s latest policy session was in focus in Asia.