US worker productivity rises moderately in third quarter; labour costs elevated
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US WORKER productivity increased moderately in the third quarter, resulting in only a gradual slowdown in labour costs that could cast a cloud over the inflation outlook.
Nonfarm productivity, which measures hourly output per worker, increased at a 2.2 per cent annualised rate last quarter, the Labor Department’s Bureau of Labor Statistics said on Thursday (Nov 7).
Data for the second quarter was revised lower to show productivity rising at a 2.1 per cent pace instead of the previously reported 2.5 per cent rate. Economists polled by Reuters had forecast productivity advancing at a 2.3 per cent rate.
Productivity increased at a 2 per cent pace from a year ago. The moderate pace of productivity does not bode well for the inflation and interest rate outlook.
Unit labour costs – the price of labour per single unit of output – rose at a 1.9 per cent rate in the July-to-September quarter. That followed a 2.4 per cent pace of expansion in the second quarter. Labour costs increased at a 3.4 per cent rate from a year ago.
The Federal Reserve is later on Thursday expected to cut interest rates again, this time by a quarter of a percentage point to the 4.5 o 4.75 per cent range.
The US central bank launched its policy easing cycle with an unusually large half-percentage-point rate cut in September, the first reduction in borrowing costs since 2020. The Fed hiked rates by 525 basis points in 2022 and 2023.
Compensation rose at a 4.2 per cent rate last quarter after increasing at a 4.6 per cent pace in the second quarter. It advanced at a 5.5 per cent rate from a year ago. REUTERS
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