The US second quarter labor productivity rebounds could help ease wage inflation.

With the economic recovery in the United States, labor productivity rebounded in the second quarter, helping to curb wage-related inflationary pressures. Data released by the U.S. Bureau of Labor Statistics on Thursday showed that non-farm productivity in the second quarter was at an initial value of 2.4%, better than the market's expectation of 2%, and a sharp contrast to the revised -1.8% in the first quarter. At the same time, non-farm unit labor costs in the United States grew by 1.6% in the second quarter, slightly better than the market's expectation of 1.5%, and lower than the 6.6% in the first quarter. Federal Reserve officials closely monitor this data as productivity improvements (including technological advancements such as artificial intelligence) can help restrain wage inflation. Labor costs are a major expense for many businesses, so companies often seek new technology and upgrade equipment to improve employee efficiency, thereby alleviating the inflationary pressure brought by high wages. In addition to controlling labor costs, efforts by companies to improve efficiency also help alleviate the impact of higher import tariffs on profit margins. Furthermore, sustained growth in labor productivity can also ease some of the pressure on businesses due to the slowdown in immigration. While it may take some time, as President Trump signs the budget bill into lawwhich permanently preserves tax cuts and includes incentives for investments, companies may be encouraged to increase capital expenditure. Other wage growth indicators also show a slowdown in growth, supporting Federal Reserve Chairman Powell's view that the labor market is no longer a source of inflationary pressure. Powell stated last week that he believes wages are "getting closer and closer" to a sustainable level. With the labor market entering a cooling phase, most economists expect wage growth to further slow down in the future. Economists are closely monitoring wage growth in industries heavily affected by Trump's crackdown on illegal immigration policies, as a decrease in future labor supply may force employers to raise wages to fill the gap. A recent survey by the Dallas Fed shows that some local businesses have begun to raise wages and extend working hours to deal with this situation. The report from the U.S. Bureau of Labor Statistics shows a slight increase in total working hours in the second quarter. Average hourly wages, not adjusted for inflation, are growing at an annual rate of 4%; after adjusting for inflation, employee compensation is growing at a rate of 2.3%.