US labour productivity showed no improvement in the third quarter, the Labour Department said today in a report below expectations and the weakest since late 2005.
The productivity report showed the effects of a slowing economy and rising wages. Analysts had expected the report to show a 1.1% increase in worker productivity.
Non-farm business output grew 1.6% in the July-September quarter, but hours worked also rose 1.6%. Unit labour costs, a key measure of inflation, were up 3.8% in the quarter. Second-quarter productivity was revised down to show growth of 1.2% from an earlier estimate of 1.6%.
Productivity, while complex to measure, is seen as an essential factor in long-term economic health, allowing companies to reap higher profits while giving workers higher pay without raising prices.
Productivity has now slowed to its weakest pace since the fourth quarter of 2005 - when it fell 0.1% - supporting other economic readings that have shown a slowdown of the US economy since midyear.
Over the past year, labour productivity was up 1.3% in the non-farm economy. The latest estimate of US economic growth showed a tepid 1.6% pace of expansion in the third quarter.
A key price index linked to the third-quarter productivity report, meanwhile, cooled to 1% from 3.4% in the April-June quarter.
Analysts said the report underscores concerns that the economy may be unable to rebound without stronger productivity gains. They said that the productivity data are representing a lower speed limit for the economy.
