WASHINGTON: US worker productivity rose at the strongest pace in four years in the third quarter, pushing labour costs down, the government said Wednesday in a report offering comfort to the inflation-wary Federal Reserve.
Nonfarm productivity, or hourly output per worker, increased at a 4.9 per cent annual rate in the third quarter, the Labour Department said, well ahead of Wall Street forecasts.
It was the strongest growth in productivity since a 10.4 per cent surge in the third quarter of 2003 and was more than double the revised 2.2 per cent gain posted during the second quarter.
"It's a positive signal for growth and it also shows less inflationary pressure. It's very encouraging for the Fed," said economist Michelle Meyer of Lehman Bros in New York.
The increase in productivity more than offset a rise in hourly compensation, which grew at a 4.7 per cent annual rate, up from 4.4 per cent in the second quarter, and pushed unit labour costs -- a gauge of inflation and profit pressures -- down at a 0.2 per cent pace, the first drop in more than a year.
Strong productivity growth should help ease price pressures, and the latest report suggested that a slowdown that had been in evidence might not have been as sharp as some analysts had feared.
Over the last 12 months, nonfarm productivity grew 2.4 per cent, the fastest gain since the first quarter of 2005, the Labour Department said.
A separate report from the Commerce Department showed that inventories of unsold goods at US wholesalers rose a larger-than-expected 0.8 per cent in September while sales jumped 1.3 per cent.
The inventory-to-sales ratio -- a gauge of how long it would take to deplete existing stocks at the current sales pace -- fell to a record low 1.10 months' worth in September from 1.11 months in August. — Internet
US worker productivity surges at 4.9pc annual rate
FE Team | Published: November 09, 2007 00:00:00 | Updated: February 01, 2018 00:00:00
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