Third-Quarter Productivity Unchanged, Labor Costs Rise

November 2, 2006 8:30 AM, EST

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orker productivity was unchanged following a revised 1.2% gain in the second quarter, the Labor Department reported Thursday.

Economists had expected third-quarter productivity to rise at a 1% annual rate, Bloomberg reported.

Among manufacturers, productivity rose at a revised 5.9% rate after a 2.7% increase in the second quarter.

Productivity is a measure of how much an employee produces for every hour of work.

Labor costs posted their biggest year-over-year gain since 1983, rising at a 3.8% rate to levels 5.8% above those of September 2005, the Labor department said.

When worker efficiency improves at a slower pace and labor becomes more expensive, companies may raise prices in order to guard their profits, contributing to more rapid inflation.