US productivity increases 4.9% in third quarter

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FILE – In this June 11, 2020 file photo, workers on scaffolding lay blocks on one of the larger buildings at a development site where various residential units and commercial sites are under construction in Cranberry Township, Butler County, Pa. U.S. productivity rose at a 10.1% rate in the second quarter as the number of hours worked declined by the largest amount since the government started compiling the data more than 70 years ago. The Labor Department said Thursday, Sept. 3 that hours worked fell by 42.9%, contributing to a 37.1% decline in output as the coronavirus pandemic ripped through nearly every corner of the U.S. economy. (AP Photo/Keith Srakocic, File)

WASHINGTON (AP) — U.S. productivity increased between July and September, but at a slower pace than in the previous quarter.

Productivity advanced 4.9% in the third quarter, following an even larger 10.6% surge in the second quarter, the Labor Department reported Thursday.

Labor costs fell by 8.9% after rising by 8.5% in the second quarter.

Productivity measures the amount of output per hour of work and is a key component in rising living standards.

Even with the third quarter slowdown, productivity is higher than it has over much of the past decade. Productivity grew by a modest 1.7% for all of last year after an even slower 1.4% gain in 2018.

Economists have had parse numbers this year distorted by the pandemic, with the big surge in the second quarter revealing how employment dropped more sharply than output. With fewer workers employed, productivity at many companies was elevated.

“The data have been especially volatile quarter-to-quarter reflecting the impact of COVID-19 on the economy,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “The underlying trend in productivity will likely moderate in the near term.”

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