WASHINGTON (AP) — The efficiency of American workers slowed sharply in the summer as a huge pullback by consumers threw the national economy into reverse.þþThe Labor Department reported Thursday that productivity — the amount an employee produces for every hour on the job — grew at an annual pace of 1.1 percent in the third quarter, down from a 3.6 percent growth rate in the second quarter.þþWith productivity growth slowing, labor costs picked up. Unit labor costs — a measure of how much companies pay workers for every unit of output they produce — increased at a 3.6 percent pace in the third quarter, compared with a 0.1 percent rate of decline in the previous period.þþWorker productivity growth slowed as overall production declined, reflecting the hit to consumers and the economy as a whole from the housing, credit and financial turmoil.þþIn the latest sign of the ailing job market, the number of people continuing to draw unemployment benefits jumped by 122,000, to 3.84 million, in late October, a separate report from the department showed. It was the highest level since late February 1983, when the country was struggling to recover from a long and painful recession. þþNew filings for jobless benefits last week dipped to 481,000, a still-elevated level that suggested companies were in a cost-cutting mode.þþThe 1.1 percent productivity growth logged in the summer beat economists’ expectations for a 0.8 percent growth rate. The rise in labor costs — while welcome to workers — was faster than the 2.8 percent pace economists were forecasting.þþEconomists often look at labor compensation for clues about inflation. These days, however, the Federal Reserve and analysts are more concerned about the economy’s feeble state. þþWhile the increase in labor costs may raise some economists’ eyebrows, the Fed is predicting inflation pressures will lessen as the economy loses traction.þþThe 1.1 percent productivity gain was the smallest since the final quarter of last year, while the increase in labor costs was the biggest since that time.þþThe government employment report to be released on Friday is expected to show a loss of 200,000 jobs in October. The unemployment rate — now at 6.1 percent — is expected to climb to 6.3 percent. þþ
Source: NY Times
