US productivity rose at an annualised rate of 2.2 per cent in the second quarter and labour costs jumped less than expected, easing inflation fears and dismissing any concerns that a 1970s-style wage-price spiral could start to unfold.

The data, released on Friday by the Labor Department, confirms one of the key elements of strength in the US economy. Even as growth has slowed and companies have cut jobs and hours, workers have been able to step up and maintain high levels of productivity. In the first quarter, US productivity grew at a pace of 2.6 per cent.