Productivity Growth Lowest in the Year; Labor Costs Moderate

Productivity, the key ingredient to rising living standards, as measured by output per hour of all persons, rose at just 0.2% during third quarter, reports Labor Department. That was better than the zero change that was first reported, but is still the weakest performance since a 0.1% decline in productivity growth during the 4t quarter of 2005.

The seasonally adjusted annual rates of productivity growth in the third quarter were: 0.4 percent in the business sector and 0.2 percent in the nonfarm business sector. In manufacturing, revised productivity increases in the third quarter were: 6.7 percent in manufacturing, 9.0 percent in durable goods manufacturing, and 3.1 percent in nondurable goods manufacturing.

Hourly compensation in nonfarm business grew 2.6 percent in the third quarter of 2006, following the 1.2 percent decline in the second quarter (as revised). When the rise in consumer prices is taken into account, real hourly compensation declined 0.4 percent in the third quarter of 2006 and fell 5.9 percent one quarter earlier.

The costs of wages and benefits per unit of output increased at a revised annual rate of 2.3% in the 3rd quarter, compared to 3.8% rate of increase first reported a month ago.

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