Washington, DC, November 3, 2005--Productivity in the third quarter rose at an annual rate of 4.1%, according to a report from the Labor Department.
Unit labor costs, a key measure of inflationary pressures from compensation, fell 0.5% at an annualized rate for the biggest decline since the second quarter of last year.
Economists had been expecting a gain of 2.6% in productivity in quarter.
Productivity is measured by units of output per hour worked. It's an essential factor in long-term economic health, but is extremely difficult to measure in the short-run.
In the third quarter, output increased 4.2% while hours worked rose only 0.1%, the government agency said.
Real hourly compensation (adjusted for inflation) fell 1.4%, the biggest decline since the fourth quarter of 2002.
In the manufacturing sector, productivity increased 4.5% while unit labor costs fell 1.6%.
Productivity has increased 3.0% in the past four quarters, the largest year-over-year increase since the second quarter of 2004. Unit labor costs have risen 2.7% in the past year.
