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U.S. Labor Productivity Jumps 2.3% In Q3, Slightly More Than Initially Estimated

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Revised data released by the Labor Department on Thursday showed labor productivity in the U.S. increased by slightly more than initially estimated in the third quarter. The report also said unit labor costs rebounded by less than previously estimated.

The report said productivity surged up by 2.3 percent in the third quarter compared to the previously reported 2.2 percent spike. The upward revision to the pace of productivity growth matched economist estimates.

The upwardly revised jump in productivity in the third quarter compares to the 3.0 percent leap in the second quarter.

The Labor Department said the increase in productivity, a measure of output per hour, was little changed from the initial estimate as both output and hours worked increased at the same rates originally reported.

Output jumped by 4.1 percent in the third quarter after spiking by 5.0 percent in the second quarter, while hours worked climbed by 1.8 percent after rising by 2.0 percent in the previous quarter.

Meanwhile, the report said unit labor costs rose by 0.9 percent in third quarter compared to the 1.2 percent jump previously reported. Economists had expected the increase in unit labor costs to be downwardly revised to 1.1 percent.

The downward revision to the pace of unit labor cost growth came as the jump in hourly compensation was downwardly revised to 3.1 percent from 3.5 percent. Revised data showed hourly compensation was unchanged in the second quarter.

Real hourly compensation, which takes changes in consumer prices into account, climbed by a revised 1.1 percent in the third quarter compared to the previously reported 1.4 percent increase and a 1.6 percent drop in the second quarter.

The downwardly revised increase in unit labor costs in the third quarter still reflects a rebound from the 2.8 percent slump in the previous quarter.

"The recent pickup in productivity is consistent with the solid momentum in consumer spending and real business investment, enhanced by the sizeable fiscal stimulus boost," said Gregory Daco and Lydia Boussour, Chief U.S. Economist and U.S. Economist at Oxford Economics.

They added, "Furthermore, in a sign that inflationary pressure remain contained, faster productivity growth is helping restrain unit labor costs despite a increasingly tight labor market."

Compared to the same quarter a year ago, productivity was up by 1.3 percent in the third quarter, as output jumped by 3.7 percent and hours worked increased by 2.3 percent.

Unit labor costs were up by 0.9 year-over-year amid a 2.2 percent surge in hourly compensation. Real hourly compensation was down 0.4 percent year-over-year.

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