U.S. labor productivity increased in the third quarter

The U.S. labor productivity recovered at a faster pace in the third financial quarter. However, labor costs are still on the rise.

According to a report from the U.S. Labor Department, the country’s inflation remains high, so the Federal Reserve (Fed) will continue to raise interest rates.

The increase in labor productivity in the third quarter was 0.8%, and it exceeded economists' expectations. Earlier, in the second quarter, it fell by 4.1%. Thus, productivity is still negative year-on-year, decreasing by 1.3% in total.

At the same time, some analysts consider the productivity’s weakness to be exaggerated, as for the last five years its growth in the U.S. has averaged about 1.6%.

Unit labor costs, in turn, rose by 5.3% compared to the previous year. Conrad DeQuadros, senior economist at Brean Capital, stressed that data on labor productivity, costs and profit margins significantly affect the economy and inflation. At present, costs are growing too fast and inconsistently with the Fed’s target level of inflation.