WASHINGTON, Sept. 7 (UPI) -- U.S. business costs in the second quarter rose 3.3 percent compared to 4.7 percent in the first quarter, the Labor Department said Wednesday.
Unit labor costs, the biggest component of business costs, rose 2.6 percent in the second quarter of 2005. That increase was driven by a 4.4-percent hike in hourly compensation among non-farm workers. But when the rise in consumer prices was taken into account, real hourly compensation edged up 0.2 percent in the second quarter of 2005.
Although hourly compensation rose more in the first quarter 2005 than in the second quarter, a larger increase in labor productivity in the first quarter offset more of the increase in labor costs. That means that unit labor costs in the first quarter grew more slowly, 1.7 percent, than the 2.6-percent increase in the second quarter.
Thus, the second quarter's more rapidly rising labor costs could be used by the Federal Reserve as a reason to keep raising interest rates.
