Productivity in the U.S. non-farm business sector rose at an annual rate of just 1.1 percent in the third quarter, down sharply from the revised 3.6 percent pace in the previous quarter, the Labor Department reported Thursday.
But the third-quarter pace in productivity, the amount of output per hour of work, beat analysts' expectations for a 0.8 percent growth rate.
Productivity slowed as overall production, or output, declined. Output in non-farm business sector dropped at a 1.7 percent pace in the third, compared with a downwardly revised 2.8 percent growth rate.
The drop was reflecting adverse effects to consumer spending and the economy as a whole by the current severe financial crisis, according to analysts.
With productivity growth slowing, labor cost picked up in the July-to-September period.
Employers' unit labor costs, or costs of wages and benefits for each unit of output, increased at a 3.6 percent pace, in contrast to a 0.1 percent decline in the secon quarter. The gain was faster than the 2.8 percent rate analysts had been expecting.
Increases in labor costs, which account for two-thirds of a company's production costs, are good for workers, but could lead the Federal Reserve to worry about inflation.
Growth in productivity allows companies to pay their workers more without having to raise the price of their products, which fuels inflation.
Source: Xinhua
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