Financial News: U.S. Q3 Labor Productivity Growth Unrevised, Labor Costs

U.S. Q3 Labor Productivity Growth Unrevised, Labor Costs Rise Less Than Estimated

12/10/2024 - 09:30:00 (RTTNews)

(RTTNews) - While the Labor Department released a report on Tuesday showing the jump by U.S. labor productivity in the third quarter was unrevised from the previous estimate, the report also showed a downward revision to the increase by U.S. unit labor costs.

The report said labor productivity shot up by 2.2 percent in the third quarter, unrevised from the initial estimate and in line with economist estimates.

The sharp increase in labor productivity in the third quarter reflects a modest acceleration from the 2.1 percent surge in the second quarter.

The third quarter jump by productivity, a measure of output per hour, came as output spiked by 3.5 percent compared to a 1.2 percent increase by hours worked.

"Productivity growth, which over the last year has exceeded the average for the business cycle, may slow in response to looser labor market conditions but we expect it to continue at a solid pace," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

Meanwhile, the Labor Department said the increase in unit labor costs in the third quarter was downwardly revised to 0.8 percent from the 1.9 percent jump originally reported. Economists had expected the pace of unit labor cost growth to be unrevised.

Unit labor costs grew by much less than previously estimated, as the surge by hourly compensation was downwardly revised to 3.1 percent from 4.2 percent.

The jump by real hourly compensation, which takes changes in consumer prices into account, was also downwardly revised to 1.8 percent from 3.0 percent.

"Unit labor costs were revised lower, consistent with our view - and the Federal Reserve's - that the labor market and wage growth are receding as a source of inflationary pressures," said Vanden Houten.

Revised data also showed unit labor costs slumped by 1.1 percent in the second quarter compared to the previously reported 2.4 percent spike.

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