Productivity rose at a brisk 5.1% annual rate in the third quarter. even better than the 4% growth figure the government previously announced and a considerable pickup from the 1.7% pace registered in the second quarter, the US Department of Labor said, according to the Wall Street Journal.
Productivity is the amount of output per hour of work. Economists keep a close eye on the productivity figure because gains to productivity help to dampen inflation. Productivity hikes also let companies raise worker salaries without putting upward pressure on prices, which would eat up those wage gains.
Meanwhile, hourly compensation in the third quarter rose at a brisk 4.9% rate, compared with a 3.9% pace in the second quarter. Adjusted for inflation, hourly compensation went up at a 3% pace in the third quarter, an improvement from the 0.5% growth rate in the previous quarter, according to the DoL.
The growth rates for both compensation figures in the third quarter marked the biggest increases since the third quarter of 2000, suggesting that workers who have jobs are making gains, the government said.
The rise in third-quarter productivity helped to push down unit labor costs, good news for companies trying to control costs to boost profits. Labor costs fell at an annual rate of 0.2% in the third quarter, an improvement from the 2.2% growth rate in the second quarter.
For the 12 months ending September, productivity grew at a brisk 5.6% pace, representing the strongest showing since the first quarter of 1973, the government reported.