Labor Productivity Growth Revised Up to 2.3%; Unit Labor Costs Fall 0.1%

Labor productivity growth was revised upward for Q3 to 2.3% on a seasonally adjusted, annualized basis. This compares to 1.9% previously reported. Despite, the increase in productivity, the trend over the past year and a half has been decelerating growth. This is a normal process of economic recovery. At early stages of the process, employers attempt to get greater output out of their existing workforces. As some point however, little more can be done and new output demand is met by greater levels of new hiring. Moving forward, new growth will likely correspond with a pickup in new payroll employment.

Over the quarter, output per hour of labor rose 2.3% annualized, while compensation per hour rose by 2.2%. Unit labor costs, the measure of cost of a unit of output per hour, therefore fell by a slight 0.1%. Inflationary pressure from the labor markets remain minimal if existent at all due to large amounts of labor market slack leading to limited pricing power on the part of workers.

(SAAR) %	Q3 2010	Q2 2010	Q1 2010	Q4 2009	Q3 2009	Q2 2009
Output Per Hour	2.3	-1.8	3.9	6.0	7.0	8.4
Compensation/ Hour	2.2	2.9	-0.9	1.5	3.4	9.1
Unit Labor Costs	-0.1	4.9	-4.6	-4.2	-3.3	0.6