With output jumping by much more than hours worked, the Labor Department released a report on Thursday showing a bigger than expected increase in U.S. labor productivity in the third quarter.
The report said labor productivity surged up by 3.0 percent in the third quarter after climbing by 1.5 percent in the second quarter. Economists had expected production to increase by 2.4 percent.
The bigger than expected increase in productivity, a measure of output per hour, came as output saw another substantial increase but the pace of growth in hours worked slowed.
Output spiked by 3.8 percent in the third quarter after soaring by 3.9 percent in the second quarter, while house worked rose by 0.8 percent in the third quarter after jumping by 2.4 percent in the second quarter.
"The 3.0% annualized rebound in productivity in the third quarter is a big turnaround from the stagnation seen a year ago and suggests that real wages will begin to pick up more rapidly soon," said Michael Pearce, U.S. Economist at Capital Economics.
The Labor Department also said unit labor costs rose by 0.5 percent in the third quarter after edging up by 0.3 percent in the second quarter. The uptick in costs matched economist estimates.
The report said hourly compensation surged up by 3.5 percent in the third quarter after climbing by 1.8 percent in the second quarter.
Real hourly compensation, which takes changes in consumer prices into account, rose by 1.5 percent in the third quarter after increasing by 2.1 percent in the second quarter.
Compared to the same quarter a year ago, productivity was up by 1.5 percent in the third quarter, as output climbed by 2.9 percent and hours worked increased by 1.4 percent.
Meanwhile, unit labor costs were down by 0.1 year-over-year in the third quarter, as the productivity growth offset a 1.4 increase in hourly compensation.
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