US productivity up 2.3% in third quarter

Posted: Updated:
(AP Photo/Marcio Jose Sanchez, File). FILE- In this Sept. 18, 2018, file photo, farmworkers pick melons in the early morning hours in Huron, Calif. On Thursday, Dec. 6, the Labor Department issues revised data on productivity in the third quarter. (AP Photo/Marcio Jose Sanchez, File). FILE- In this Sept. 18, 2018, file photo, farmworkers pick melons in the early morning hours in Huron, Calif. On Thursday, Dec. 6, the Labor Department issues revised data on productivity in the third quarter.
(Amy Beth Bennett/South Florida Sun-Sentinel via AP, File). FILE- In this Sept. 24, 2018, photo metal workers are silhouetted on the top of The Rise, a luxury apartment building under construction in Flagler Village in downtown Fort Lauderdale, Fla. On... (Amy Beth Bennett/South Florida Sun-Sentinel via AP, File). FILE- In this Sept. 24, 2018, photo metal workers are silhouetted on the top of The Rise, a luxury apartment building under construction in Flagler Village in downtown Fort Lauderdale, Fla. On...

By MARTIN CRUTSINGER
AP Economics Writer

WASHINGTON (AP) - U.S. productivity grew at an annual rate of 2.3% in the July-September quarter, slower than the previous quarter but still an improvement over the weak annual gains of the past decade. Labor costs rose at a modest pace in the third quarter.

The third quarter gain in productivity was revised up slightly from an initial estimate a month ago of a 2.2% gain, the Labor Department said Thursday. It marks a more modest advance than the second quarter's 3% annual rate of increase. Labor costs were up at a 0.9% annual rate in the third quarter following a decline at a 2.8% rate in the second quarter.

Productivity, the amount of output per hour of work, has been weak throughout the current expansion.

It rose last year by just 1.1%. Over the past decade, productivity has hovered at an average annual rate of 1.3%, just about half the 2.1 percent gains in the seven decades starting in 1947. The period from 2000 to 2007 saw even stronger annual gains of 2.7 percent, a burst that was credited to efficiency improvements achieved with the introduction of high-tech computers and other devices to the workplace.

Finding a solution to the slowdown in productivity growth is one of the key economic challenges facing the country. Rising productivity is critical to boosting standards of living because productivity gains allow companies to pay workers more without having to increase the cost of their products, which can be inflationary.

The Trump administration will find it difficult to achieve its goal of sustained GDP growth of 3% or better each year without significant improvements in productivity. An economy's potential for growth is determined by an expansion in the labor force, which is determined largely by birth rates and immigration, as well as the growth in productivity.

The government reported last week that the economy's total output, as measured by the gross domestic product, rose at an annual rate of 3.5% in the third quarter, a strong reading but down from the second quarter's sizzling 4.2% GDP advance.

In a separate report, the Labor Department said that the number of Americans filing for unemployment benefits fell to 231,000 last week, a drop of 4,000 from the previous week. Benefit applications, a proxy for layoffs, have been at ultra-low levels for months, underlining the strength of the U.S. labor market.

Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

sorry to interrupt
your first 20 are free
Access to News 12 is free for Optimum, Comcast®, Spectrum Networks® and Service ElectricSM customers.
Please enjoy 20 complimentary views of articles, photos, and videos during the next 30 days.
you have reached your 20 view limit
Access to News 12 is free for Optimum, Comcast®, Spectrum Networks® and Service ElectricSM customers.
Please login or create an account to continue enjoying News12.
Our sign-up page is undergoing maintenance and is not currently available. However, you will be given direct access to news12.com while we complete our upgrade.
When we are back up and running you will be prompted at that time to complete your sign in. Until then, enjoy the local news, weather, traffic and more that's "as local as local news gets."