U.S. Productivity Growth Accelerates in Q2 as Labor Costs Stay Below Expectations

U.S. labor productivity rose at a 1.4% annualized rate in Q2 2026, more than double the 0.6% expected.
Q1 productivity was revised higher to +0.8%, marking the fifth consecutive quarter of gains.
Manufacturing productivity also jumped 1.9%, driven by a 4.6% surge in output — the strongest increase since Q4 2021.
Meanwhile:
• Inflation-adjusted compensation fell 3.2%, the largest quarterly decline since Q4 2022.
• Unit labor costs rose just 1.3%, below the 2.1% expected.
The latest data points to accelerating productivity growth alongside relatively contained labor-cost pressures.