During the third quarter, American workers were significantly less productive with production increases failing to keep up with working hours.
The Labor Department stated non-farm productivity on Wednesday, calculating hourly production per employee, fell between July and September at an annualized rate of 0.3 percent, the largest fall in nearly four years.
Unit labor costs, labor cost per unit of production, increased in the third quarter at a rate of 3.6 percent.
During the third quarter, American workers were significantly less productive and their output growth struggled to keep up with working hours.
The Labor Department stated non-farm productivity on Wednesday, which tracks hourly production per worker dropped between July and September at an annualized rate of 0.3 percent, the largest drop in nearly four years. In the fourth quarter of 2015, the last drop that was sharper.
The decline could set back some economists ‘ anticipated pick-up prospects in the trend productivity growth rate following 2017 tax law reforms partly aimed at promoting investment.
During the quarter, analysts had anticipated productivity growth of 0.9 percent. Part of the surprise was due to a slight upward revision of the Labor Department’s forecast of productivity growth in the second quarter, up from a previous estimate of 2.3 percent to 2.5 percent.
With the revisions, labor productivity in the third quarter was 1.4 percent higher than in the same 2018 period. That is a tenth of a point above the average annual growth rate of 1.3 per cent for 2007-2018, but still below the long-run average of 2.1 per cent between 1947 and 2018.
In the second straight quarter labor productivity also decreased in the factory sector, dipping at an annual rate of 0.1 percent in the third quarter.
Unit labor costs, labor price per unit of production, increased in the third quarter at a rate of 3.6 percent. Working hours increased at a rate of 2.4%, while output increased by 2.1%.


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