(MENAFN- Saudi Press Agency) U.S. worker productivity increased in the third quarter at a slightly faster pace than previously estimated while labor costs fell for a second consecutive quarter, the government reported Wednesday.
Productivity€"the amount of output per hour of work€"increased at an annual rate of 2.3 percent in the July-September quarter, while labor costs fell at a rate of 1 percent, the Labor Department said. In its initial estimate, the department said productivity grew at a 2 percent rate and labor costs rose 0.2 percent.
The improvement in productivity growth combined with a faster decline in labor costs should reassure the Federal Reserve (Fed) that there is little threat of unwanted inflation pressures harming economic growth in the near term.
Greater productivity is the key factor determining rising living standards. It enables companies to pay their workers more without needing to increase prices for their goods or services.
In the nearly six years since the Great Recession, when millions of workers lost their jobs and found it difficult to get new ones, labor costs have remained contained. Over the past year, labor costs have risen 1.2 percent, a modest increase that is well below the long-term average of 2.8 percent annual gains, suggesting that wages and salaries are not rising fast enough to spark inflation.
The Fed closely watches productivity and labor costs for signs that inflation may be accelerating.
Productivity over the past year has increased by a weak 1 percent, well below the long-term average of 2.2 percent. In the two years after the recession, productivity soared. Companies cut jobs faster than their output was declining, driving productivity higher as fewer workers produced more. Productivity grew 3.2 percent in 2009 and 3.3 percent in 2010. But in the last three years, productivity growth has averaged only 1 percent annually as hiring as accelerated.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.