US productivity and costs increase in third quarter

American businesses increased productivity in the third quarter but costs also rose, figures released on Wednesday showed.

According to the Labor Department, unit-labour costs were revised upward to show a 1.8% quarter-on-quarter in the three months to September, while unit-labour costs rose 2% in the previous three months compared with the 1.8% decline that was initially reported.

As a result, unit-labour costs rose 3% year-on-year, compared with an original estimate for a 2% increase.

Meanwhile, growth in productivity was revised upward to show a 2.2% quarter-on-quarter gain in the third quarter, compared with an estimate of a 1.6% gain. On a year-on-year basis, productivity rose 0.6%, slightly higher than the initial 0.4% reading.

The report added that real compensation was estimated to have grown 2.4% quarter-on-quarter compared with a previous estimate of a 1.4% increase and 3.4% year-on-year from an initial 2.2% reading.

“We view the revisions to compensation growth in this morning’s report as encouraging,” said analysts at Barclays.

“Labour market tightness may finally be starting to lead to an uptick in wage growth; however, this indication is tentative as of yet.

“Productivity, on the other hand, has to recovery from five years of subpar growth, and we see little evidence of a substantial pickup coming in the near future.”