Thank you, Carlos and good morning everyone. In the second quarter, we delivered 9% revenue growth on both a reported and organic constant currency basis. Our adjusted EBIT margin was up 20 basis points better than planned and supported by our better than expected revenue growth, offset partially by increased PEO pass-throughs and head count growth in our implementation and service organizations.
I'll share more on this last point, but I discuss our outlook. Our tax rate was up slightly in the quarter versus last year, driven by the lapping of a one-time international tax benefit we experienced last year. When including the benefit from share repurchases we had a 9% increase in our adjusted diluted earnings per share. Moving on to the segments our Employer Services revenues increased 6% on a reported basis and 7% on an organic constant currency basis.
In addition to the strong bookings, retention trends, and pays per control performance Carlos outlined our client funds interest grew for the first time since the pandemic started as lower average yield was offset by a tremendous 28% balanced growth. This growth included some benefit from the lapping of last year's deferred employer social security taxes and incremental benefit from the repayment of a portion of those employers social security taxes which together contributed several points of growth in addition to the already robust growth from higher client count, employment growth, and higher wages.
Our ES margin increased 40 basis points ahead of our expectations for the quarter and supported by better-than-expected revenue performance. Moving on, our PEO continued to deliver exceptional performance with 15% revenue growth in the quarter. Average worksite employees accelerated to 16% year-over-year growth and reached 660,000 for the quarter. Key contributors were strong bookings and retention as well as very healthy pays per control growth within the PEO client base.
Revenues excluding zero margin, pass-throughs grew 18%, which was driven by worksite employee growth, as well as higher average wages and higher SUI revenues for worksite employee. PEO margin was down 10 basis points in the quarter, included in that figure was pressure from workers' comp and SUI expenses due primarily to work or mix and wages. Moving on to our updated outlook for the year. For ES revenues, we are narrowing our guidance and now expect growth of about 6% the upper end of our previous guidance range of 5% to 6%.
The primary drivers for our higher outlook are the stronger Q2 performance, our higher client funds interest outlook for the year and higher pays per control growth partially offset by an expectation from incremental FX headwind in the back half of this year on the recent strengthening of the US dollar. For our client funds interest revenue, we're raising our outlook by $20 million to a range of $440 to $450 million. Like last quarter, we're raising our balanced growth assumption meaningfully to now expect growth of 18% to 20%.
Whereas our client funds yield expectation is unchanged despite the improvement in interest rates. This is primarily because our stronger than previously expected balanced performance creates a temporary lag with greater short-term investments before we purchase higher yielding fixed rate securities. For US pays per control, we're raising our outlook by 1% to now expect 5% to 6% growth. We continue to expect that a gradual ongoing recovery in labor force participation will support job growth in the first half of the year was a bit ahead of expectations.
In addition to client funds in pays per control, we are raising our retention guidance slightly and now expect it to be down 40 basis points for the year. Although we still anticipate some normalization in client switching activity trends so far this year have been very positive and January is looking like a continuation of that same strength.
One thing we're not changing at this time is our ES bookings guidance. As Carlos outlined our Q2 performance was strong but bookings is one place for the evolving pandemic conditions and the Omicron variant has potential to create noise as we saw at the outset of the pandemic, although we haven't seen a material impact at this time we still think it's prudent to maintain the wide range of outcomes in our guidance. For our ES margin, we are making no change for our outlook of up 75 to 00 basis points.
Although we are raising our revenue guidance and although some of that is coming from high margin revenues like client fund interest and pays per control at the same time, we are now more fully caught up on implementation and service headcount, after running a bit behind, earlier this year and late last year. This investment in implementation and service teams is critical, both because the current year-end period is important to our clients and their employees and also as we look to get ahead of the needs of our growing client base.
With the continued outperformance in retention, we're now planning to grow our implementation and service teams, slightly more than we had previously planned as we exit this fiscal year. In addition to this growth in personnel we also took one-time compensation actions across our organization in recognition of broader inflation trends in the market. The incremental expenses associated with those actions are now included in our outlook.
Although this tight labor market has traded its own set of challenges for most companies, we are very pleased we've been able to grow our organization as much as we did these past few months and the wage increases we layered in give us confidence regarding our staffing levels at a busy time of year. We are also pleased we've been able to support those changes without detriment to our existing guidance ranges. Moving on to the PEO following the strong first half trends in both client growth and worksite employee growth we are now expecting average worksite employees to grow 13% to 15% and we are likewise raising our guidance for PEO revenues and revenues excluding zero margin, pass-throughs by 2% points each.
Our outlook will continue to be sensitive to employment trends within our PEO client base as well as bookings and retention performance. So although we are currently contemplating growth to be a bit lower in the back half of the year we could continue to see upside if the current robust trends persist. For PEO margin we are making no change to our guidance of flat to down 50 basis points for the year. Although we are raising our revenue guidance, we are at the same time expecting higher SUI and workers' comp expenses to create offsetting margin pressure.
Putting it all together for our consolidated outlook, we now expect revenue to grow 8% to 9%. For adjusted EBIT margin we continue to expect an increase of 50 to 75 basis points as we shared earlier this year, we expect our margin improvement to be concentrated in the fourth quarter and expect our margin to be down in Q3, particularly following the recent personnel growth and wage increases. We're making no change to our tax rate assumption and with these changes, we now expect growth in adjusted diluted earnings per share of 12% to 14%.
Thank you, and I'll now turn it back to Michelle for Q&A.
