U.S. Productivity Rises 1.6% In Third Quarter

By Jeffry BartashMarketWatch Pulse

The productivity of U.S. businesses rose in the​ third ​quarter at a decent 1.6% annual pace despite the first decline in hours worked since the end of the Great Recession. Output of goods and services increased 1.2% from July through September, but hours worked fell 0.5%. That's the first decline since the third quarter of 2009 and it stemmed entirely from a sharp drop in the amount of time manufacturing workers put in on the job. Hours worked by employees who make long-lasting or durable goods sank 3.6%, reflecting the struggles of U.S. manufacturers coping with a strong dollar and less spending by domestic energy firms. Manufacturing output jumped 4.9% in the third quarter, but that's because companies built up an excess of inventories they are now drawing down. Unit-labor costs rose by a mild 1.4% annual rate. Hourly compensation for all workers rose 3%, but it was just 1.4% adjusted for inflation. In the third quarter, productivity was revised to show a 3.5% gain instead of 3.3% - the biggest increase in six quarters. Yet over the past 12 months U.S. productivity has risen at a tepid 0.4% rate, and it's been especially weak since 2011.

Copyright © 2015 MarketWatch, Inc.

Continue Reading Below