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Labor costs flat in Q2, show dormant US price pressure

A technician works on a Cummins Inc. ISL diesel engine at the E-ONE Inc. factory, in Ocala, Florida.
Mark Elias | Bloomberg | Getty Images
A technician works on a Cummins Inc. ISL diesel engine at the E-ONE Inc. factory, in Ocala, Florida.

U.S. labor costs were flat in the second quarter, a sign of minimal inflationary pressures in the economy that could fan concerns inflation is too low.

The reading from the Labor Department on Thursday, which revised down an earlier estimate for the data, was well below the 0.8 percent gain analysts were forecasting in a Reuters poll.

At the same time, the report showed productivity rose 2.3 percent during the period, which was a bigger gain than expected and gave a positive sign for the outlook for wages.

U.S. incomes have been depressed since the 2007-09 recession, which has helped keep inflation rates low.

Over the last year, inflation has been well below the U.S. Federal Reserve's 2 percent target, which has led some analysts to expect the Fed will be slow about winding down a bond-buying economic stimulus program.

Fed Chairman Ben Bernanke warned in July that very low inflation raises the risk the economy can slip into a downward spiral of falling prices and wages known as deflation. Fighting deflation is extremely difficult for policymakers.


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