U.S. Productivity Rises Again, Best Back-to-Back Gains in Four Years

U.S. productivity rose again in the third quarter after an even bigger rise in the spring, the best back-t0-back performance in four years.

Productivity climbed at a 2.2 percent annual pace in the threee months from July to September, a government report released Thursday showed.  That was in line with economists’ expectations. Productivity was revised up a notch to a 3 percent annual rate for the second quarter.

U.S. companies managed to boost the amount of goods and services produced by 4.1 percent without substantially growing the amount of labor used.  As a result, unit-labor costs–how much it costs to produce a given unit of economic output–rose just 1.2 percent. This is likely to hold down any inflationary pressures in the economy.

Wage hikes are accelerating. Hourly compensation rose at a 3.5 percent rate the July through September period, up from the 1.9 percent pace in the spring.

Manufacturing productivity grew less rapidly than the broader economy, rising just 0.5 percent. This likely reflects the expansion of manufacturing in the U.S., which forces factories to  hire new workers with less experience and who need more training.