Productivity Rises 8.1% in Third Quarter

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orker productivity grew at an annual rate of 8.1% in the third quarter, the fastest pace since the first quarter of 2002, the Labor Department reported Thursday.

Productivity is a measure of how much an employee produces for every hour of work. It increased from the revised 7% in the second quarter because the economy grew at the same time businesses continued to trim payrolls, Labor said.

Among manufacturers, productivity grew at an 8.6% pace, after rising at a 3.1% rate in the prior quarter.

Bill Sullivan, a senior economist at Morgan Stanley, told Bloomberg that productivity can help keep inflation tame, interest rates low and benefits the economy as a whole.

Unit labor costs, or the amount paid for each unit of production, fell at a 4.6% annual rate last quarter, following a 3.2% drop in the previous three months.

Total output increased at an 8.8% rate, the most since the fourth quarter of 1992, compared with a 4.6% gain in the previous three months.

In the year ended in September, productivity rose 4.7%, up from a 4.1% increase in the 12 months ended in June.