WASHINGTON - U.S. workers boosted their productivity from July through September at the fastest pace since the end of 2009, adding to signs of stronger economic growth.
The Labor Department said Monday that
productivity increased at a 3 percent annual rate in the third quarter. That's
up from an initial estimate of 1.9 percent and much stronger than the 1.8
percent rate from April through June.
Productivity rose because economic
growth was much stronger than previously estimated in the third quarter.
Productivity is the amount of output per hour of work.
Labor costs fell in the third quarter,
evidence that inflation will remain low.
Higher productivity enables companies
to pay employees more without sparking inflation. But greater productivity can
also slow hiring if it shows companies don't need more workers to boost output.
However, productivity growth has been
mostly flat over the past year. That's because the gains from the past six
months have been offset by declines in previous six months.
Worker productivity is improving along
with economic growth. Hiring has accelerated since the summer and wages are
gradually rising. The economy grew a 3.6 percent annual rate in the third
quarter, much faster than the 2.8 percent rate previously estimated.
But productivity gains have slowed in
the past three years after jumping in the aftermath of the recession. Worker
productivity grew just 1.5 percent in 2012 and 0.5 percent in 2011. Those gains
followed much healthier increases of 3.3 percent in 2010 and 3.2 percent in
2009. But productivity improved because companies ramped up output after having
laid off many workers during the Great Recession.
The Federal Reserve monitors
productivity and labor costs for any signs that inflation could pick up. Mild
inflation has allowed the Fed to keep short-term interest rates at record lows
and to buy bonds to try to keep long-term rates down. Fed officials meet
Tuesday and Wednesday to assess their stimulus policies.