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U.S. labor costs fall in second quarter; productivity revised down

Job seekers stand in line to meet with prospective employers at a career fair in New York City, October 24, 2012. REUTERS/Mike Segar

WASHINGTON (Reuters) - U.S. labor costs were far more weaker than previously thought in the second quarter, a government report showed on Thursday, which could give the Federal Reserve ammunition to maintain its accommodative monetary policy stance for a while.

The Labor Department said unit labor costs, the price of labor for any given unit of production, fell at a 0.1 percent annual rate instead of the 0.6 percent increase reported last month. Unit labor costs had increased at a rate of 11.6 percent in the first quarter.

Compared to the second quarter of 2013, they rose 1.7 percent.

The Fed is keeping a close eye on wage growth as it ponders when to raise benchmark interest rates, which it has kept near zero since December 2008. Investors do not expect a rate increase until around the middle of next year.

The Labor Department also revised its initial estimate for productivity, to show it increasing at a 2.3 percent annual rate in the second quarter rather than the 2.5 percent pace reported last month.

(Reporting by Lucia Mutikani; Editing by Paul Simao)