Output at U.S. nonfarm businesses grew much faster than hours worked in the third quarter, lifting labor productivity at a 3.6% annual rate, the Bureau of Labor Statistics reported Thursday. The preliminary estimate showed output rising at a 3.7% rate while hours edged up 0.1%.
What the figures measure
Productivity measures how much a business sector produces for each hour of work. In this quarter, the gain came with a small increase in total hours and a substantially larger increase in output. Compared with the same quarter last year, productivity was up 2.1%. The quarterly rate is annualized, which expresses the pace over a full year if it were to continue.
Unit labor costs fell at a 0.7% annual rate. That measure tracks labor compensation per unit of output, so it can fall even when compensation rises if output per hour grows faster. Separately, the agency said hourly compensation adjusted for consumer prices rose at a 1.1% annual rate during the quarter.
What to watch next
The figures cover the nonfarm business sector and describe an aggregate. They cannot tell readers how much of the gain came from a particular technology or whether a particular employer is producing more with the same staffing. They also answer a different question from the October jobs report, which counts payroll changes and tracks unemployment.
The BLS incorporated revisions to historical output data in this release. Its release calendar lists December 8 for a revised third-quarter estimate.