US non-farm business productivity advanced a strong 4.7 per cent in the third quarter, more swiftly than first reported, according to a government report today that could help allay inflation worries.
The increase in productivity, which marked an acceleration from the second quarter, pushed unit labor costs - a key gauge of profit and price pressure - down by 1 per cent despite a solid 3.7 per cent gain in hourly compensation, the Labor Department report showed.
The increase in productivity and drop in unit labor costs -- a gauge of the cost of labor associated with any given unit of production -- were both larger than Wall Street had expected.
Economists had looked for productivity growth to be revised up to 4.5 per cent from the originally reported 4.1 per cent gain, with unit labor costs slipping 0.8 per cent.
In addition, the department revised its measure of hourly compensation for the second quarter down sharply to account for new information, a revision that also suggested less pressure on prices and profits than some economists had thought.
It said compensation advanced a revised 0.9 per cent in the second quarter, with unit labor costs down 1.2 per cent. Previously, it had said compensation rose 4 per cent in the second quarter, with unit labour costs up 1.8 per cent.
Federal Reserve officials, who meet next week to set short-term interest rates, have expressed concern lofty energy prices could ignite broader inflation. Strong productivity could help allay those concerns because it enables firms to pay higher wages without a need to push up selling prices.