US nonfarm productivity rose less than expected in the third quarter and a drop in unit labor costs pointed to subdued wage inflation that should allow the Federal Reserve to maintain its massive monetary stimulus to the economy for a while.

Productivity rose at a 1.9 per cent annual rate after increasing at a 1.8 per cent pace in the second quarter, the Labor Department said today.

Productivity, which measures hourly output per worker, was unchanged compared to the same period last year.

Economists polled by Reuters had forecast productivity rising at a 2.2 per cent rate in the July-September quarter.

Unit labor costs - a gauge of the labour-related cost for any given unit of output - fell at 0.6 per cent rate in the third quarter, underscoring the lack of wage-related inflation pressures in the economy. Unit labour costs had risen at a 0.5 per cent pace in the second quarter.

Economists polled by Reuters had expected unit labour cost to rise at a 0.2 per cent pace in the third quarter.

Labour costs were up 1.9 per cent from a year ago. (Reuters)