Business labor productivity increased at a 2.9 percent annual rate during the third quarter of 2012, the U.S. Bureau of Labor Statistics reported this week. This is the fastest rate in two years. The increase in productivity reflects increases of 4.2 percent in output and 1.3 percent in hours worked.
A Marketwatch report stated that the ability of companies to control their costs made it easier for the Federal Reserve to continue propping up the economy without stirring inflation.
From the third quarter of 2011 to the third quarter of 2012, productivity increased 1.7 percent as output and hours worked rose 3.5 percent and 1.8 percent, respectively.
Manufacturing sector productivity declined 0.7 percent in the third quarter of 2012, as output decreased 0.7 percent and hours were unchanged. Productivity fell 1.6 percent in the durable goods sector and increased 0.2 percent in the nondurable goods sector. Over the last four quarters, manufacturing productivity increased 1.3 percent, as output increased 4.0 percent and hours worked rose 2.6 percent. Unit labor costs in manufacturing grew 3.2 percent in the third quarter of 2012 and increased 1.5 percent from the same quarter a year ago.
In November nonfarm business productivity for the third quarter was reported to have increased only 1.9 percent, but was revised to 2.9 percent due to an upward revision to output. Unit labor costs were revised down and decreased 1.9 percent, due to both the upward revision to productivity and a downward revision to hourly compensation.