Non-Farm Productivity Gains as Growth Slows, U.S. Reports

Productivity in the non-farm sector of the economy improved at an annual rate of 2.5% in the third quarter, the government said today in a report containing clear signs of slower economic growth.

The Labor Department said output in the non-farm sector rose at an annual rate of 3.7% in the July-September period while hours worked grew at a much slower annual rate of 1.3%.

Other data in the department’s productivity report showed that hourly wage gains to workers outpaced consumer inflation for the first time this year on a quarter-to-quarter basis and that unit labor costs--a key determinant of future price inflation--increased dramatically in the manufacturing sector.

The 2.5% annual gain in productivity marked an improvement over the 2.1% gain reported in preliminary data and was more than double the 1.1% annual-rate improvement in non-farm productivity posted in the second quarter.

Still, while American workers were producing more goods for each hour worked, their total work hours grew just slightly, a sign of slackening demand for goods.

The evidence of the slowing economy was more pronounced in data for the manufacturing sector, which posted a productivity gain of just 1% at an annual rate in the third quarter.

The Labor Department said unit labor costs in manufacturing rose at a revised annual rate of 4.9% in the third quarter after rising at an annual rate of just 1% in the third quarter.