In this Friday, Oct. 6, 2017, photo, workers build an apartment and retail complex in Nashville, Tenn. On Wednesday, Dec. 6, 2017, the Labor Department issues revised data on productivity in the third quarter. (AP Photo/Mark Humphrey)
December 06, 2017 - 5:54 AM
WASHINGTON - U.S. worker productivity rose 3 per cent in the third quarter, the best showing in three years, while labour costs fell for a second straight quarter.
The increase in productivity in the July-September quarter was double the 1.5 per cent gain in the second quarter and both quarters were up significantly from a scant 0.1 per cent rise in the first three months of the year. Labor costs fell 0.2 per cent after an even bigger 1.2 per cent decline in the second quarter.
The third quarter figure for productivity was unchanged from an initial estimate while labour costs were initially estimated to have risen by 0.5 per cent.
Economists are hopeful that the upturn in productivity may be a sign that this key measure of living standards is improving after a prolonged period of weakness.
Economists believe finding ways to increase productivity, the amount of output per hour of work, is the biggest challenge facing the economy right now. They say that without an improvement, the Trump administration will have difficulty reaching its goal of doubling economic growth in coming years.
The upturn in the past two quarters reflects the fact that overall output, as measured by the gross domestic product, accelerated sharply following a weak start to the year. GDP grew at an annual rate of 3.3 per cent in the third quarter, the government reported last week, and that followed a 3.1 per cent rise in the second quarter. It was the first back-to-back GDP gains of 3 per cent or better in three years.
Productivity actually declined in 2016, dropping 0.1 per cent. It was the first annual decline in 34 years and followed a string of weak annual performances since the economy emerged from recession in mid-2009.
Productivity has averaged annual gains of just 1.2 per cent from 2007 through 2016, a sharp slowdown from average annual gains of 2.6 per cent from 2000 to 20007. Those increases reflected a boost from the increased use of computers and the internet in the workplace.
Rising productivity allows employers to boost wages without triggering higher inflation.
News from © The Associated Press, 2017