Productivity Growth Near 2-Year Low

The productivity of U.S. workers grew at a 1.8% annual rate in the third quarter, the slowest pace in nearly two years, the government reported Tuesday.

The deceleration in this vital economic indicator, however, raised some hope that employers who had squeezed so many efficiencies out of their existing workforces might seek to boost hiring as a way to meet customer demand.

The Labor Department’s snapshot of productivity -- the amount an employee produces for every hour of work -- showed that efficiency gains were slightly weaker than the 1.9% growth rate first estimated for the July-to-September quarter.

The new figure, based on more complete data, marked a slowing from the 3.9% productivity-gain pace logged in the second quarter.

Efficiency gains are important to the economy’s long-term vitality. They allow the economy to grow faster without propelling inflation. Companies can pay workers more without raising prices, which would eat up those wage gains.

During the economic slump, however, gains in productivity came at the expense of workers.

“I think we are setting ourselves up for much better, firmer hiring,” said Anthony Chan, senior economist at JPMorgan Fleming Asset Management.

In other economic news, consumers stepped up their borrowing at a seasonally adjusted annual rate of 4.4% in October, or by $7.7 billion, from the previous month, the Federal Reserve reported.

Consumers’ borrowing appetite -- led by higher demand for car loans and other nonrevolving credit -- was stronger than the $6-billion increase analysts had expected.

In September, consumer credit surged at a 7.9% pace, or by $13.6 billion.

The Fed’s report includes credit card debt and loans for such items as boats, cars and mobile homes. It does not include real estate loans, such as home mortgages or equity loans.