U.S. productivity flat in third quarter

The productivity of American workers was flat in the third quarter, the poorest showing since a decline of 0.1 percent in the final quarter of last year, the Labor Department reported Thursday.

The flat reading for productivity, the amount of output produced for each hour of work, was defying the 1.1 percent increase expected by analysts.

Productivity in the second quarter was revised to a gain of 1.2 percent, down from an initially estimated 1.6 percent increase.

Over the past four quarters, productivity has risen by 1.3 percent, the weakest showing since a 1.1 percent rise in early 1997, according to the report.

Productivity, while complex to measure, is seen as an essential factor in long-term economic health, allowing companies to reap higher profits while giving workers higher pay without raising prices.

The report also showed that unit labor costs, salaries and benefits per unit of output and a key inflation gauge, rose by 3.8 percent in the third quarter.

The rise followed gains of 9 percent in the first quarter and 5.4 percent in the second quarter.

For the year ending in September, labor costs have increased by 5.3 percent, the fastest pace since late 1982.

Some analysts believe that the poor showing in productivity in the third quarter does not necessarily reflect a trend in underlying productivity. But some others say that the combination of the slowing productivity and the rising wage pressures could prompt the Federal Reserve to raise interest rates again to keep inflation in check.

Source: Xinhua