* Labor cost growth slows in second quarter
* US economic growth accelerates in second quarter
NEW YORK, July 28 (Reuters) - U.S. Treasury yields fell on Friday after data showed that U.S. labor costs increased less than expected in the second quarter, adding to concerns that inflation will remain low. The Employment Cost Index, the broadest measure of labor costs, increased 0.5. percent in the April-June period after accelerating 0.8 percent in the first quarter, the Labor Department said on Friday. It comes after the Federal Reserve on Wednesday noted that both overall inflation and a measure of underlying price gains had declined and said it would "carefully monitor" price trends.
I think the market is focused on the employment cost index. Youre getting further confirmation that theres not a meaningful pick up in wages, which probably doesnt bode well for the outlook for inflation, said Subadra Rajappa, head of U.S. interest rate strategy at Societe Generale in New York.
Benchmark 10-year notes were last down 3/32 in
price to yield 2.32 percent, up from 2.31 percent on Thursday. Other data showed that U.S. economic growth accelerated in the second quarter as consumers ramped up spending and businesses invested more on equipment, confirming that the sluggish performance early in the year was temporary.