U.S. productivity rises 3.6% as unit labor costs fall
The preliminary third-quarter report shows output growing much faster than hours worked.
U.S. nonfarm business labor productivity rose at a 3.6% annualized rate in the third quarter, while unit labor costs fell 0.7%, according to the preliminary government report.
Output increased 3.7% and hours worked edged up 0.1%, both at seasonally adjusted annualized rates. Hourly compensation rose 2.9%, less than the increase in output per hour.
The distinction matters: unit labor costs measure compensation per unit of output, not workers' total pay. They can fall even while hourly compensation rises if productivity grows faster.
Second-quarter productivity growth was revised up to 2.1% from 1.4%. The new third-quarter figures are preliminary and will be revised, rather than a final measure of the economy's efficiency.
Compared with a year earlier, productivity rose 2.1% and unit labor costs increased 2.4%. The quarterly decline in costs therefore does not mean labor costs fell over the full year, or that inflation elsewhere has disappeared.
The release came alongside lower initial jobless claims. One report measures output and labor costs over a quarter; the other tracks weekly benefit applications. Neither replaces Friday's monthly jobs report.
