Productivity, Jobless Claims Fall

Declining productivity and continued job creation in the U.S. may be setting the stage for increased price pressures down the road, though few signs point to an immediate inflationary threat, two reports released Thursday suggest.

Productivity, which measures the time, effort and cost of providing goods and services, fell a revised 0.3% in the third quarter, the Labor Department reported. It is the first decline since last year’s fourth quarter and a worse showing than the government’s initial estimate a month ago. According to that previous estimate, productivity grew 0.2% in the third quarter. Productivity rose at a revised 0.6% rate in the second quarter.

Separately, the government reported that first-time claims for unemployment compensation fell last week by 8,000 to 336,000, in line with expectations. The less volatile four-week average of new claims edged up for the week ended Nov. 23 to 337,750, from 336,750 the week before.

Taken together, the reports suggest price pressures could rise. “Inflationary pressures remain modest but are bubbling just below the surface, given the low unemployment rate and the lack of any improvement in productivity,” said John Williams, chief economist at BT Securities Corp.

There was limited reaction in the financial markets to the news Thursday, though bond prices fell in anticipation of the monthly employment report due today.