Productivity in U.S. nonfarm business sector grew at a seasonally adjusted annual rate of 0.2 percent in the third quarter, better than the zero change initially estimated, the Labor Department reported Tuesday.

The 0.2 percent gain in productivity, the amount of output produced for each hour of work and the key measure of the economy's efficiency, followed an increase of 1.2 percent in the second quarter and was the smallest since the final quarter of last year.

Productivity 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.

During the July-to-September period, the costs of wages and benefits per unit of output, or unit labor costs, increased at an annual rate of 2.3 percent, compared to an advance of 3.8 percent in the second quarter.

The 2.3 percent gain in unit labor costs came after a drop of 2. 4 percent plunge in the second quarter and a surge of 9 percent in the first quarter this year.

The slowdown in growth of unit labor costs, a key inflation gauge, is a welcome showing for the Federal Reserve, which is concerned that wage pressures could fuel inflation.

If labor costs outpace the rise in productivity, it means that companies either have to raise the cost of their products, which can push inflation higher, or trim profit margins.

Source: Xinhua