US productivity fastest in three years
4 November, 2017, 12:00 am
WASHINGTON – US worker productivity increased at its fastest pace in three years in the third quarter but the trend remained moderate, suggesting that a recent acceleration in economic growth was unlikely to be sustained.
Other data on Thursday showed the number of people filing for unemployment benefits fell to a near 44-1/2-year low last week, offering further evidence that the labour market was tightening despite hurricane-related disruptions in September.
The surge in productivity last quarter held down growth in labour costs, indicating that inflation pressures could stay benign for a while. Still, jobs market strength bolsters the case for the Federal Reserve raising interest rates in December. The US central bank kept rates unchanged on Wednesday.
“While the data point to a solid economy, they also reinforce the view that growth is not likely to remain strong for an extended period without improved wage gains,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “Productivity is still growing too slowly.”
The Labor Department said nonfarm productivity, which measures hourly output per worker, rose at a three per cent annualised rate. That was the quickest pace since the third quarter of 2014 and followed an unrevised 1.5 per cent rate in the April-June period.
The rise outpaced economists’ expectations for a 2.4 per cent pace and was flagged in last week’s third-quarter gross domestic product report, which showed the economy growing at a three per cent rate during that period.
Productivity increased at a 1.5 per cent rate compared to the third quarter of 2016.
Manufacturing productivity fell at a five per cent rate last quarter, the steepest rate of decline since the first quarter of 2009.