Labor productivity in the United States experienced a modest rise in the third quarter, as noted in a Thursday report from the Labor Department. However, unit labor costs increased significantly more than anticipated.
The report indicated that labor productivity rose by 2.2% in the third quarter, following a revised increase of 2.1% in the second quarter. Economists had forecasted a 2.3% rise in productivity, as opposed to the initially reported 2.5% spike for the prior quarter.
This notable boost in labor productivity, which measures output per hour, was driven by a 3.5% surge in output compared to a 1.2% rise in hours worked. "Productivity gains can unlock longevity in economic growth," stated Oren Klachkin, Economist at Nationwide Financial Markets. "These data are somewhat encouraging, but we don't think the post-global financial crisis low productivity spell has been definitively broken."
Conversely, the report highlighted that unit labor costs jumped by 1.9% in the third quarter, following a revised increase of 2.4% in the second quarter. Projections had estimated a 0.5% rise in unit labor costs, compared to the previously reported 0.4% increase for the last quarter.
The unexpected surge in unit labor costs was attributed to a 4.2% rise in hourly compensation during the third quarter, following a 4.6% increase in the preceding quarter. Real hourly compensation, which accounts for changes in consumer prices, saw a 3.0% increase in the third quarter after a 1.7% rise in the second quarter.
