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US productivity increases at fastest pace in two years
[WASHINGTON] US worker productivity increased at its fastest pace in two years in the third quarter, helping to curb growth in labor costs, but the trend remained weak.
The Labour Department said on Thursday that nonfarm productivity, which measures hourly output per worker, rose at a 3.1 per cent annual rate. The increase ended three straight quarters of decline.
Productivity fell at a revised 0.2 per cent rate in the second quarter, which was previously reported as a 0.6 per cent pace of decline. Economists polled by Reuters had forecast productivity rising at a 2.0 per cent rate in the third quarter.
Productivity was unchanged compared to the third quarter of 2015.
The surge in third-quarter productivity was flagged by a report last week showing an acceleration in gross domestic product during the same period.
The economy grew at a 2.9 per cent pace in the third quarter after expanding at a 1.4 per cent rate in the April-June period.
Output per worker in the third quarter jumped at a 3.4 per cent rate, also the fastest pace since the third quarter of 2014. That was up from the 1.6 per cent pace notched in the April-June period.
The increase in output came despite total hours worked rising only at a 0.3 per cent rate in the third quarter, slowing from a 1.7 per cent pace of increase in the second quarter. That reflected a drop in hours for the self-employed.
Unit labour costs, the price of labor per single unit of output, rose at a 0.3 per cent pace in the third quarter after increasing at a downwardly revised 3.9 per cent rate in the second quarter. Unit labour costs were previously reported to have increased at a 4.3 per cent rate in the second quarter.
Third-quarter unit labor costs rose at a 2.3 per cent rate compared to the same period of 2015.
Hourly compensation per hour increased at a 3.4 per cent rate in the third quarter after increasing at a 3.7 per cent pace in the prior quarter. The strong quarterly increases suggest a pickup in wage growth. Hourly compensation rose at a 2.3 per cent rate from a year ago.