Productivity, a crucial factor in the economy’s long-term vitality, grew at a brisk annual rate of 4 percent in the third quarter, the Labor Department reported Thursday.
The growth in output per worker hour followed a feeble 1.7 percent advance in the second quarter.
“I think the good news is that productivity is very healthy and is supporting economic growth,” said Sung Won Sohn, chief economist at Wells Fargo Bank in Minneapolis. “The downside is that this is the reason employment is going basically nowhere.”
Separately, the Labor Department said new claims for unemployment benefits dropped last week by a seasonally adjusted 20,000, to 390,000.
But for the 10th straight week the more reliable four-week average stayed above 400,000, a level associated with a weak labor market, and the number of workers continuing to collect unemployment benefits rose to 3.58 million for the week ended Oct. 26, the most recent period for which information is available.
“I think we definitely have a jobless recovery,” Sohn said. “Businesses are shell-shocked by all the blows received over the past year and a half. They are relying primarily on overtime, technology and by not spending money on people, capital goods or inventories.”
Although the productivity growth was a bit slower than the 4.3 percent gain forecast by economists, they were still heartened by the report.
“Businesses continue to crack the whip, and that is showing up in dramatic gains in productivity,” said Joel Naroff, president of Naroff Economic Advisors. “While the number of hours worked barely rose in the third quarter, output soared. As a result, workers became even more efficient.”
Unit labor costs, a closely watched measure of wage pressures, advanced at a 0.8 percent rate in the third quarter, after a 2.2 percent rise in the second. Economists were expecting costs to drop by 0.6 percent.
For the 12 months ending in September, productivity grew at a 5.3 percent rate, the strongest showing since the 12 months ending in the third quarter of 1983.
The latest news reinforced the notion among analysts that the economy, while advancing fitfully, probably will not slip back into recession.
