U.S. productivity grows at 1.3% pace in third quarter

WASHINGTON, Dec. 3 (Chinese media) -- Productivity in the U.S. non-farm business sector rose at an annual rate of 1.3 percent in the third quarter, better than the 1.1 percent gain estimated a month ago and the 0.9 percent rise economists expected, the Labor Department reported Wednesday.

But the third-quarter pace in productivity, the amount of output per hour of work, was down sharply from the 3.6 percent pace in the second quarter and marked the weakest showing since the fourth quarter of 2007.

Productivity slowed as overall production, or output, declined. Output in non-farm business sector dropped at a 1.9 percent pace in the third quarter, compared with the 2.8 percent growth rate in the second quarter.

The drop was reflecting adverse effects to consumer spending and the economy as a whole by the current severe financial crisis, according to analysts.

With productivity growth slowing, labor cost picked up in the July-to-September period.

Employers' unit labor costs, or costs of wages and benefits for each unit of output, increased at an annual rate of 2.8 percent after having declined at a 2.6 percent rate in the second quarter.

The third-quarter advance was the biggest jump since the fourth quarter of last year, but below the 3.6 percent pace initially reported.

Increases in labor costs, which account for two-thirds of a company's production costs, are good for workers, but could lead the Federal Reserve to worry about inflation.

Growth in productivity allows companies to pay their workers more without having to raise the price of their products, which fuels inflation.