US business productivity grew more slowly in the third quarter than first thought to climb at a revised 1.8 per cent annual rate, a government report showed today.
Growth in non-farm business productivity, or worker output per hour, was the slowest since the fourth quarter of 2002.
Wall Street had expected a rise to a 2 per cent clip from 3.9 per cent in the second quarter as worker efficiency moderated and US firms boosted hiring to maintain output.
A preliminary report released last month had shown 1.9 per cent productivity growth in the third quarter and a 1.6 per cent rise in unit labor costs.
Higher unit labour costs also backs views that the Federal Reserve will stick with a measured pace of rate increases and lift its benchmark funds rate a quarter percentage point to 2.25 per cent at its next meeting on December 14th.
Hours worked grew at a rate of 2.4 per cent in the third quarter, the fastest pace since third quarter of 1999 as companies ran operations for longer to maintain output.
This had been initially reported as a 2.1 per cent growth rate. Productivity growth was also substantially lower compared with a year ago when it rose by 9 per cent.
But this is not necessarily bad news since it also reflects cyclical changes in company hiring and a welcome boost to job creation.