US productivity misses forecast

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The productivity of US workers picked up in the three months to June, but still fell short of forecasts, US Labor Department figures have shown.

Average output per worker rose at an annual pace of 1.8% in the quarter, up from 0.7% in the first three months of the year but below forecasts of 2%.

Separate date showed labour unit costs rose 2.1% for the period.

The figures are unlikely to change the Federal Reserve's outlook, and analysts expect it to hold rates on Tuesday.

'Modest' growth

Productivity is seen as a key indicator for rising living standards, because it allows higher wages without firms having to raise prices.

"The report does show that productivity improved in the second quarter, but still is growing only modestly and as a result, labour costs are still growing - probably at the high end of the Fed's comfort zone," said Gary Thayer, chief economist at AG Edwards.

He predicted that US rates would be kept at 5.25%, although concerns over inflation remain.

While unit labour costs were higher than expected, they were less than the revised 3% rise in the first quarter.