US 3Q Productivity Exceeds Forecasts, Wages Increasing

Productivity at U.S. nonfarm businesses increased more than expected in the third quarter, keeping a lid on wage inflation.

The Labor Department said on Thursday productivity grew at a 2.0 percent annual rate after expanding at an upwardly revised 2.9 percent pace in the second quarter.

Economists polled by Reuters had forecast productivity, which measures hourly output per worker, advancing at a 1.5

percent rate after the second quarter’s previously reported 2.3 percent expansion pace.

But the trend in productivity remains sluggish. It rose at only a 0.9 percent pace compared to the third quarter of 2013.

Over the past three years, it has never topped 1 percent on an annual basis.

Unit labor costs, the price of labor for any given unit of production, rose at a 0.3 percent rate in the third quarter,

after declining at a 0.5 percent pace.

But pay is accelerating, a good sign for the economy.

Compensation per hour increased at a 2.3 percent rate in the third quarter after a similar rise in the prior quarter.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza