Third Quarter Productivity Better Than Anticipated

Washington, DC, Dec. 3, 2008--Worker productivity slowed in the summer while wage pressures increased, but both developments were better than expected.

The Labor Department reported Wednesday that productivity, the key ingredient for rising living standards, rose at an annual rate of 1.3 percent in the July-September quarter. That's down from the 3.6 percent growth rate in the second quarter, but slightly higher than the 1.1 percent increase initially reported a month ago and better than the 0.9 percent rise economists expected.

Wage pressures, as measured by unit labor costs, rose at an annual rate of 2.8 percent, after having declined at a 2.6 percent rate in the second quarter. The rate of increase in the third quarter was the biggest jump since a 4.5 percent rate in the fourth quarter of last year, but was below the 3.6 percent advance originally reported and that economists expected.

Analysts had expected a big downward revision in productivity given the fact that overall output, as measured by the gross domestic product, was revised to show a decline of 0.5 percent at an annual rate, a bigger drop than the 0.3 percent decrease that was originally reported.